Angel investor capital is the best type
of funding to obtain for a startup once all other funding options (money from friends
and family, personal savings, bank loans, and credit cards) have been exhausted.
The most effective way of finding the right angel investor is for the entrepreneur
to actively seek industry-specific investors
and perform basic research on the angel investors they plan to approach.
1. Just ask around
Often times an entrepreneur in need of angel capital can ask their business associates
and acquaintances. One’s personal accountant, banker, and lawyer serve as great
sources to inquire since they may have clients who are
accredited angel investors. Another positive aspect of asking personal contacts
is that it increases an entrepreneur’s chance of acquiring financing from people
that s/he may already know through family, friends, colleagues, etc. The farther
the entrepreneur’s relationship is to the investor, the more likely the entrepreneur
will not be able to easily secure such funding; therefore, it is always a great
idea for new business owners to first ask those they have direct association with
before approaching others.
For those who do not have much luck in finding an accredited angel investor through
direct association, it is important to mention that although it may be difficult,
it is not completely impossible to still find the right angel investor. One important
point that new entrepreneurs should keep in mind is that their business idea must meet an angel investor’s expectations.
The innovative idea(s) of the entrepreneurs must be something that customers will
be willing to purchase, showing potential for a lucrative return.
In addition, any new entrepreneur who plans to approach an angel investor should
be ready to submit their company’s business plan which must be prepared as concise
as possible. Several quality references should also be made available in order to
confirm an entrepreneur’s credibility. Lastly, new business owners should not only
ask around but they should also be patient and keep an open mind since potential
angel investors can be anywhere.
2. Network with others
One way in which entrepreneurs can easily establish a group of contacts is by joining
industry-specific professional organizations or trade groups. By attending these
meetings, conferences, and social events on a regular basis, they can clearly become
acquainted with successful business owners in any given field.
The entrepreneur can also grow their network by attending investor fairs and making
presentations at these gatherings. This not only provides them with a good amount
of exposure but will also generate a considerable amount of audience feedback. The
response of others is crucial for strengthening or revising one’s business plans
and goals. It also gives the new business owner a sense of what the general public
really feels about the product(s) and how the product(s) and service(s) will perform
on the market. The Small Business Administration (SBA) office or a local university
business school can provide information on such events.
In addition, an entrepreneur can inconspicuously inquire about successful members
of their industry at these gatherings. Experienced investors provide valuable insight
and advice and serve as individuals who are worthy to network with. As with every
personal relationship, it is also best to locate a “common ground” with a prospective
angel. When a common basis is established among both parties, it is more likely
that an entrepreneur’s funding proposal
will be taken more seriously.
The goal of making contact with these successful industry investors is to make a
good impression and for the opportunity to present their pitch to an angel group.
It is also important to follow through any leads that have been established.
3. Go online
Websites such as Go4Funding.com can provide
fast and effective ways for small business owners to locate potential investors.
This centralized network pools together both entrepreneurs and prospective investors
from around the globe, where member biographies/profiles are featured and organized
according to the area of industry. Forums and support groups are also available
through this online community and provide a significant means of resources that
an entrepreneur needs in finding angel capital. Both parties are encouraged to register
at this site so they can have an opportunity to learn about each other for a possible
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