Angels (Personal Investors)
1. What's an angel?
2. Who is this good for?
3. When is this the best choice
for me?
4. When is this not advised?
5. Tips for getting the money.
6. Ingredients you'll need on
hand.
7. Idea Cafe Tips.
8. Watch out for!
9. Web Links.
1. What is
an angel?
The most heavenly of financial bodies: an individual who invests
in your company, usually at the very beginning. Angels' desire for
control varies widely. Some consider themselves mentors and will
become very involved, others are hands-off.
2. Who is this good for?
Early-stage companies: Angels typically provide seed money
for companies just starting up or emerging from the prototype stage
to establish their first operations;
Companies that need more than credit card financing but less
than venture capital: Most angels keep their investments well
under $100,000, so they can spread their risk across several companies.
3. When is this the best choice for
me?
- When you need a few thousand to a few hundred thousand dollars
to get going, and you don't have the personal resources to make
it happen;
- When you have a lot of wealthy friends who have money they
can comfortably risk, who believe in you personally and are willing
to bet on your potential;
- When you're willing to have investors take personal interest
in what you're doing, but don't want your biz management to be
taken over by outsiders like a venture capitalist might do.
4. When is this not advised?
- When you need more money than angels typically invest;
- When your company isn't the type to grow fast or big enough
to meet angels' expected returns soon enough;
5. Tips for getting the money
Angels are matched with mortals through relentless networking
among contacts, friends, professionals. A refusal by one angel can
easily be transfigured into an acceptance by another, on the strength
of a referral;
How did your angel make her money? If you can, dig up published
reports on her current or past companies to divine details about
her operating style and even the depth of her pockets.
Discard stereotypes. Entrepreneurs rub shoulders with angels every
day, according to James Arkebauer, author of Ultrapreneuring
and president of Venture Associates Ltd., a Denver financial consulting
firm to growth companies. "You have to look beyond the doctor, lawyer,
dentist, accountant," he says. "Think about your neighbor who drives
nice cars and owns a manufacturing company."
6. Ingredients you'll need on hand
- A concise summary of your concept and business plan.
- A longer dog-and-pony show, that includes a summary of your
business plan to present to potential angels who are seriously
interested.
- The gift of gab, plus the patience to keep explaining the beauty
of your concept to ever more people.
- Basic financial
package.
7. Idea Cafe Tips
Boil down your story so any angel can quickly "get it," then easily
relay the concept to their friends.
If your concept is too stodgy, it won't give your angels anything
to impress their friends with, so give it some sizzle.
Seek out referrals from one potential angel to another. Ideally,
you'll get yourself on the "angel track" in your area, so when people
want a fun, trendy (and more risky) investment, they'll think of
you and wonder what you're up to now.
8. Watch out for!
Angels who become devils after you've got their money. Scout down
entrepreneurs whom the angel has already supported.Was he a dream
or a nightmare to live with?
Cashing out. At some point, you and your angel will part ways.
Talk about how and when before you take the money so you won't have
any nasty surprises later on.
Angels who don't understand that this isn't a loan -- it's an
investment, and a risky one -- there's no guarantee they will see
their money again.
9. Web Links
America's
Business Funding Directory
Some 13,063 funding sources, including listings of angels and other
would-be investors.
Money
Hunter
Articles, lists of consultants, matchmaking service for angels,
investors and growth companies.
|