How to use Angel Investors to finance a start-up Business

Angel investors are individuals or groups that invest their own money in your business venture. Their investments usually range from $25k and up.

The Angel Investor will invest in upstart companies, or any company in the early stages of development. They will invest if they like your sales pitch but generally expect a rapid return on their investment. The money they invest in your business is not a loan, it’s a gift. The investors will make their money back when/if your business goes public or when/if, down the road, you sell your business for a profit.

Typically, the Angel Investor will invest for their own entrepreneurial pursuits; to help the community; to increase their investment portfolio; or a combination of the aforementioned.

Angel groups can consist of one or two members of your church, or may be on someone’s board of directors, or just an individual with a net worth well into 6-figures or more, and generally has a philanthropic heart and a real desire to help.

This article will show you how to find and Angel Investor and what they are looking for.

Difficulty: Challenging

Instructions

1. Step 1: You can locate Angel Groups by going to your local Chamber of Commerce or going online. Find an Angel Group with sufficient funds to invest in a high-risk venture. It’s high-risk because your business is new and there is pretty much a 50/50 chance of success or failure.
   
   Other places to look are:
   
   - Investment forums
   - Trade/Professional Associations
   - SBA - Small Business Administration
   - Business Schools

2. 
    

   Once you locate the group you’re interested in you will need to contact one of the members via phone or email and schedule a lunch date. Ask them if they will meet you to discuss a business idea. Take a printed version of your Business Plan to leave with your potential investor. Also take a PowerPoint presentation that gives an overview of your Business idea. Put this information on a flash drive that you can also leave with your potential Angel.

3. Here are some questions you might want to ask:
   
   1) Do you know of any investors that might be interested in my business?
   2) Would you consider looking at my business plan? If not, would you pass my business plan on to one of your associates that might be interested?
   3) Do you have any advice for me?
   4) What would it take for you to invest in my business?

4. Practice your presentation and dress the part. Depending on where you are meeting you don’t want to be over-dressed and certainly not under-dressed. Make sure your nails are clean, your breath is fresh, and you are clean from head to toe. Your clothes should be neat and freshly washed and ironed, or straight from the cleaners. Your overall appearance goes a long way in your being seen as a professional.

5. Have your ROI (Return on Investment) figures calculated to the penny and be able to explain it thoroughly. You also must be prepared to answer any question asked regarding your ROI. It’s best to role-play this with one of your associates before you meet with your potential Angel Investor.

[sallyemaycreate]

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[sallyemaycreate]

on 11/14/2009 I meant to mention that i'm also giving you a recommendation on this! Thanks again.

[sallyemaycreate]

on 11/14/2009 Very well written article and tips on how to use Angel Investors to Finance a Start-up Business... This is definitely worth taking a closer look at! Thank you so much for sharing this! 5*