How to Find an Angel Investor

An angel investor can provide seed money for your business.

An angel investor can be, quite literally, your guardian angel. Originally used to describe private individuals who invested in theatrical plays in the UK, the term angel investor is now widely used to describe private person who put their money into start-up companies. If you're trying to find funding for your startup business idea, an angel investor may be just what you need.

If you have a business project that needs funding, here's how to go about finding an angel investor to give your business a solid start and a much-needed boost.

Things You'll Need

• A solid business idea
• Family, friends and associates
• A working model or prototype
• Persistence and personality

Instructions

1. Decide if your company or product is a good candidate for an angel investor.

   In general, individual funders like these are willing to invest in companies or products that:

   - have fast growth potential. Most want to be able to cash in within five years.

   - have an exit strategy or are willing to negotiate one, for example, a public stock offering or company sale

   - are willing to give up some control or ownership of the company in return for funding

   - need less than $1 million in funding to launch/market their product

2. Talk to family, friends and associates about your business plans.

   We don't all have rich relatives, but you may find a funding source very close to home. If you do choose to accept money from a relative or friend, be sure to treat it as a business matter. Insist that you each have a lawyer to draw up and look over contracts.

3. Check with your local Chamber of Commerce and editors of local business publications.

   Your Chamber of Commerce is likely to know about any angel investing networks or individual angel investors in your area. Likewise, business publications often do stories on people who are willing to fund local business ventures.

4. Get familiar with any local universities and hook up with the Entrepreneur's Club.

   Find out if a local university has an entrepreneur's club, and if it's an option, take a couple of business courses to get involved with them. Successful businessmen and entrepreneurs are among the people most likely to become an angel investor, and they often gravitate to schools and educational institutions because of the high level of activity there.

5. Find a business incubator.

   Many cities have business incubators, places designed to help new businesses get a jump start by sharing resources that they couldn't afford on their own. While lower rents and shared resources are an obvious advantage of working with an incubator, access to venture capitalists and angel investors is a much-overlooked benefit of working with business incubators.

Tips & Warnings

• Be sure to have a polished business plan and presentation to attract a potential angel investor.

• Be passionate about your proposal. Your passion is the most compelling sales talk you have.