Angel Investors: A Blessing For Start-Up Entrepreneurs!

Gathering funds for starting a business is really tough, when you are a fresh entrepreneur looking out for opportunities to turn your dreams into reality! Nothing is more disappointing than seeing your dreams crumble due to lack of money!  That is why the Angel Investors form a great source of aid as well as encouragement for the start-up entrepreneurs.

Who are Angel Investors?

Angel Investors are referred to those businessmen (or companies) who invest money in business projects initiated by brand new entrepreneurs. Funding estimates do vary, but usually range from $150,000 to $1.5 million. Besides, the expertise, experience and contacts of the Angels also come as a great help for the starters.

What do the Angel Investors seek?

Wondering why at all the Angel Investors risk their money in a newly formed company? There are countless answers to that. But the investor’s keenness to gain better profits than that reaped by traditional investments is one of the basic reasons.  Some investors ask for securities either as common stock or as preferred stock with certain rights and liquidation preferences. Some also demand a convertible debt, or redeemable preferred stock.  Apart from that, often the ‘Angels’ are offered a high position among the company’s board members, especially that of advisers. This is another instrumental factor which drives them to invest in a start-up company.  On one hand, it solves the fund crisis of the fresher. While on the other, it assures to the investor Thus, the practice of the Angel Investors benefits both the investor and the start-up entrepreneur alike!

How to geld hold of an Angel Investor?

The ‘angels’ are not hard to find, if you know where to look for them.  You may do any of the following to get hold of an angel investor:

• Call up the nearest university which offers an entrepreneurship program. Fix an appointment with the person who is in charge of the program, as this person would definitely be able to suggest an angel investor for you.
• Contact your nearest business incubator. Most of the business incubators offer formal or informal access to angel investors.
• The angel investors often form clubs or associations to organize their activities and boost fresh entrepreneurship. Try to find out such clubs.
• Call up your chamber of commerce and ask if any angel investors’ club is affiliated to it or not.
• You may also seek information from the nearest Small Business Development Center regarding angel investor groups.
• You may also ask your accountant or your lawyer or your banker to guide you in this regard.
• Seeking information from a professional venture capitalist regarding angel investor groups might be fruitful.
• Contact a regional or state economic development agency and ask whether it is aware of any angel investor group.
• You may also get information from the editor of a local business publication. These professionals often form the right source of information.
• The executive director of a trade association you belong to, may also help you find an angel investor.

Just keep trying your hand at the above mentioned places, and you will surely find an ‘angel’ by your side!

How to convince an Angel Investor?

To solicit an angel successfully, you need to be very clear about your project. Several critical nooks and corners must be looked into before you place the business proposal before the investor.  Following are the two prerequisites for your proposal to get accepted:

• Form an advisory board that includes a securities accountant and an attorney. Two important functions of the board are to recommend angels to contact and to work with the management team to develop a business plan to present to the angel.
• Have an innovative but feasible proposal. The business plan itself should be the reason enough to draw finances.
• Clear out the legal formalities.
• If you have piled up any business loans on yourself, or if you have decided to consolidate your debts, consult a legal adviser before you contact angel investors.

So, if you are really keen on making your dream venture happen, take a little initiative and look for the Angel investors. Let your dreams not crush against the monetary limitation!  Get hold of an Angel Investor and there would be real guardian angel for your enterprise!

This was a guest post by Priscilla Solomon. Priscilla is a finance blogger and debt adviser at OVLG.

Readers: Have you had any experience with angel investors? If so, what was your experience?  IJ has not gone for outside investors and curious what others experience in this area has been.