Business Funding

Convincing Angel Investors Your Business is Worth the Risk

You have a great idea for a business but venture capital firms are unwilling to lend you startup funding for any of a number of reasons. Venture capitalists are more likely to fund large startups that may need as much as $5 million and up. It only seems appropriate that one of the alternative sources of funding is named the angel investor. An angel investor is a private investor who invests personal money in an entrepreneurial company.

Many Angel Forms

Angel investors come in many forms. An angel investor might be a professional like a doctor or an attorney. Some angel investors are retired people who have discretionary money. Much to people’s surprise, the typical angel investor is not a millionaire.

Many private investors are business associates. Business associates are any persons or businesses that might be willing to invest in your company because they are familiar with your business idea and find it to be workable. They may be people who will be working for you and want to invest in the company or potential suppliers who have a vested interest in you starting a business that will use their products.

There are even angel investors who are fellow entrepreneurs and simply want to help other entrepreneurs like themselves get started.

Angels are Everywhere

If you get the idea that angel investors are just about anywhere you look, you would be right. Many times the small business entrepreneur only thinks in terms of traditional funders and doesn’t consider the fact that plenty of people including business associates are willing to lend money. In fact micro-lending is actually a network of angel investors who want to help small entrepreneurs pursue their goals.

How do you find angel investors? The simplest way is to take advantage of services that cater to entrepreneurs seeking startup money. Though you can search for funding through friends or business associates, the matchmaking service will bring together budding entrepreneurs and angel investors quickly and efficiently.

The angel investor actually functions in a manner similar to a venture capitalist. One of the main differences is that angel funders are as interested in things like leveraging their abilities and promoting entrepreneurship as they are in making a profit. Some angel investors will want to play an active role in your business while others will be silent investors. If an angel investor wants to participate, it gives you excellent access to knowledge and experience that can increase your chances for success.

Preparation is Important

When you decide that angel investing presents the best start up funding opportunity, it’s important to be well prepared. Your business idea must be well thought out and your business plan needs to be thorough. Don’t be deceived by the fact these investors are called “angels”. They are solid, experienced, knowledgeable investors who will ask tough questions and expect well prepared answers. You will need to be prepared to discuss your idea, marketing strategies, location, website development, customers, staff and expenses.