How to Qualify for Angel Investors
Angel investors are wealthy individuals who invest in business start-ups for reasons other than pure financial returns. Angel investors may invest in the communities in which they grew up, "giving something back to it." Or they can support business projects of the alumni from the business schools they graduated from. Another popular motivation for angel investors is helping the causes they highly value, such as green energy, poverty reduction, or the campaign against HIV/AIDs.
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Instructions
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Find a list of angel investors whom you could contact. Make this list as broad as possible and include angel investors of all stripes and colors. You can make this list based on directories, such as that of the World Business Angel Association. At this stage, it is best to include in your list even angel investors who are only slightly likely to fund your business.
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Analyze how you could present your business to certain angel investors in order to get approved for funding. Come up with things angel investors want to see in projects they would fund. Look at their past deals and review any funding criteria they made public. Remove from your list those investors whose criteria you would never satisfy. Divide the other angel investors into groups according to what they are looking for in a business to fund; for example, by geography (say, New York City), or industry of your business (wind turbines).
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Write slightly different versions of your business plan for different groups of angel investors, stressing the points of your business that they would value most. Be prepared to change the strategy of your business to better suit different angel investor groups.
In your business plan, include a general description of your business and explain how you plan to make money. Write about your customers and demand for you product, your competitors, and production processes. Include product descriptions and financial and production plans. Contact your financial advisor for more guidance on how to write business plans.
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Send your business plans to different groups of angel investors, and negotiate the terms of funding with those who become interested. Don't go for the first angel investor who is ready to put money in your firm; shop around and maybe you will find better terms. Remember that your objective is to find the necessary investments and, at the same time, give up as little control and ownership rights over your business as possible.
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Finalize the deal with the angel investor who offers you the best terms. It is always best to get advice from your lawyer and investment consultant at this stage, as the funding conditions are very important both for you and your business.
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References
Resources
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