An angel doesn’t need wings and a halo to be your savior — at least insofar as your small business is concerned.
“Angel investors,” as wealthy private-equity investors are often known, contribute significantly to small businesses and startups. According to the Center for Venture Research, angel investors provided $8.9 billion in equity funding to 26,300 companies in the first half of 2011, a nearly 5 percent increase over the same period of 2010. The average investment per company was $338,400.
Looking for an angel investor to jump-start your business? Here’s how to find one.
- Get your business investment-ready. It takes more than a great idea for a business to attract savvy angel investors. You’ll need a rock-solid business plan, an accomplished management team, a realistic valuation, a monetization strategy, and an investor exit strategy (based on selling to a larger company or going public).
- Make friends at the golf club. A personal introduction by a mutual acquaintance is likely to receive more attention — and have more traction — than a cold call. Focus on networking in places and at events frequented by high net-worth individuals, such as golf clubs and charity benefits. The people you meet may be able to help you make valuable connections.
- Find an angel network. Some angel investors operate independently, while others collaborate on the investing process. These networks invite entrepreneurs to give formal presentations and request funding. If you’re unable to connect with an individual investor, or if you’re seeking a larger investment, try an angel group in your area. Larger regional networks include the Tri State Investment Group (in North Carolina, South Carolina, and Virginia); BlueTree Allied Angels (in Pennsylvania, Ohio, and West Virginia); and Minority Angel Investor Network (in Philadelphia).
- Perfect your elevator pitch. Angel investors are busy, successful people. When asking for help, make your point quickly. Work on polishing a clear and concise pitch, which should describe a genuine problem, how you plan to solve it, and the size of your target market (i.e., how much profit potential does your idea have?). Check out our guide to the elevator pitch for help conveying your concept into 30 seconds or less.
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