Posted by : Amanda Stein Tuesday, September 25, 2012
An angel investor is typically a successful businessperson or a professional who earns money by investing on a business, especially start-up companies. This type of investor usually invests only on businesses in the area of his expertise, experience and interest. Although his primary role is to finance your business operation, he can do a lot more for you. Most angel investors participate directly in the operation of the company or they may take advisory or consultative roles, especially when your company is still new.
Why You Need an Angel Investor
A small business owner will have greater chances of succeeding if he will be able to convince an angel investor to finance his business. Here are some of the reasons why a small businessman should look for an angel investor:
- Angel investors provide the needed capital, expertise, advice and experience that are very vital for making a start-up business easier to manage and operate.
- These investors may also open their established commercial network to market the products or services of the start-up company.
- They can help in making the necessary contacts with future lenders, expert management staff, clients, buyers, and possible business partners.
Convincing the “Angels” to Invest
Since angel investors basically provide the capital in exchange for a promised financial return in the future, then they expect your company to make a profit. This could be in the form of part ownership of your company or other forms of financial returns. But first you need them to invest in your business venture, and here are some tips on how to persuade these “angels” to provide your company the financing it needs:
- You must convince him about the profitability and viability of your company, your products, or your services. It would be easier to convince him if he has experience and expertise in the same kind of business.
- Give him a thorough background about your present management team, their backgrounds and experiences, and how these can impact the success of the company. He needs this information because most angel investors want to work hands-on with the management team of the companies they invest in.
- Convince him that his personal involvement in the company, his expertise, experience and contacts in the industry (where you business is in) will ensure the success of the company. Thus, his investment will not be wasted but has a great potential of turning out a handsome profit instead.
Where to find Angel Investors
It is not difficult to find angel investors. It’s just a matter of knowing where to look. Here are the possible places you can locate an angel that will invest in your business:
- Colleges and Universities – educational institutions that carry entrepreneurship programs are your best chance. Talk to the one in charge of the program and he’ll be able to point you to potential investors.
- Angel Confederacies – these are informal groups of angel investors who have banded together to find worthy companies to invest in.
- Business Incubators – a top official of the National Business Incubation Association says that most of these organizations provide informal and formal access to angel investors.
- Venture Capital Clubs – these are formal groups of successful angel investors who are looking for companies that need funding.
Phillip Bradford is owner of www.VentureFundingNetwork.com where they can provide small business owners the chance to meet with Angel Investors to see how they can help grow their business.