How to Attract Angel Investors

Wealthy individuals and independent investors are often referred to as angels.

New business ventures require capital for growth and expansion. Wealthy individuals who are often called angel investors can potentially provide the start-up funding necessary to get your business off the ground. Angel investors also expect significantly higher returns than can be achieved through a bank savings account due to the high-risk nature of small business investing. Prepare in advance to not only attract interest from angel investors but also to improve your chances of receiving a funding infusion from this class of investor.

Instructions

1. Develop a full business plan. You may be able to start a business on your own without having a formal business plan, but without it, angel investors will not even consider investing in your business. Your complete business plan should include an overview of your business, the size of the market for your product or service, an analysis of the competition, advantages you have over the competition, complete financial projections and possible exit strategies. Prospective investors will be hesitant to hand over money to a business that has not done proper due diligence and planning.

2. Write an executive summary. Once you have your business plan in working order, draft a one-page executive summary that you can easily share with prospective investors. The executive summary should briefly describe your business, two or three compelling reasons for angels to invest in your business and the terms of the investment offering.

3. Register your investment offering. Before shopping around for investment capital, review the applicable state and federal laws pertaining to accepting investors in your company. Investors will feel more confident if your investment offering is legitimate and on file with the appropriate securities offices, providing added protection for your investors and yourself.

4. Promote your business and need for capital. If you do not take the time to promote the investment opportunity you have available, it will be difficult to attract any capital. Attend and present at venture capital and angel investor conferences, network with business associates and colleagues, or even share the news with friends and family. The more you talk up the opportunity, the more likely you'll find suitable angel investors.

References

• Small Business Notes: Angel Investors
• Inc: How to Find an Angel Investor
• Entrepreneur: Angel Investors