Are there angel investor lists that are free?
Yes, fortunately there are numerous free angel investor
lists, many of which can be found with a quick search on the internet. One in particular is
www.goBIGnetwork.com. The Go BIG Network
exists to connect entrepreneurs, job seekers, advisors, investors, and everyone
else in the startup community. At Go BIG
you can search for specific angel investors based on their preferred size of
investment, the geographic areas they serve, and their preferred industries to
invest in. You can then contact them directly through the Go BIG
system.
Alternately you can post a “Request” on the system (like
a classified ad in your newspaper) indicating what type of investment you are
looking for. Investors browse these ads when they are searching for
deals.
At the very least you should create a quick profile of
your company which will allow you to indicate that you are looking for funding
(it’s free and it only takes a minute). This way if investors are looking
through profiles of companies they can see what you’re looking for.
Where else can I find angel investors?
If you are looking for a source of angel investors
offline, you can try several paths.
Perhaps the most reliable way to find an angel is through your current
network of contacts. You may not know
any angels, but someone you know may be able to refer you to one. Keep in mind that deals are formed on trust,
and the farther you get from people you know directly, the more unknown you
will be to that investor, which lowers the likelihood of getting a deal
done. Cold calling is neither effective
nor enjoyable for the investor or you.
Thus expanding your network of contacts and meeting people whenever
possible is crucial if you need more leads.
Another potential method of finding angel investors is
through faculty in university business departments. Many professors know local potential
investors and with some convincing, they may refer you to them.
How do I persuade angel investors to choose my business?
Most deals seen by angel investors are rejected. In order be successful, you must be certain
to address the following crucial areas in your presentation to any
investor. First, the business must have
the potential to provide them with a good return on their money. If you are able to convince them of this, the
hardest work will be finished. Beware
that inflating your financial projections is NOT the way to accomplish this. You must have a comprehensive plan describing
how you will go from startup to a specific profit point.
Feed Their Desire to Invest
The motivation of an investor can prove to be very
important in their decision to invest.
Some investors want the experience of being involved in a startup
again. These will probably want to be
involved in the daily operation of the company.
Others invest purely for the potential returns. And still other angels have some combination
of those or other reasons. You should
tailor your approach to them by discovering their motivation for
investing. If you want to make
unilateral decisions and the investor wants to be heavily involved, you may
need to adjust your expectations or reconsider accepting his investment.
1.
Have a Good Management Team
Angels will also want to see a solid management
team. This is perhaps the most crucial
factor in the success of a startup, and since many angels were successful
entrepreneurs they realize its importance.
They are essentially investing in people, and the angel must be
convinced that the company is placed under the responsibility of competent,
trustworthy businessmen. The investors
must see that you are willing to hire people to supplement your weaknesses.
- Plan a Solid Exit Strategy
A planned exit strategy suitable to your business will
also help to convince angels to fund your company. They should realize that it is a very risky
investment, but the potential returns are very high.
- Create a Viable Business Plan
Your business plan needs to clearly delineate to an
investor what your business solves and how it makes money. The overall vision as well as the details of
how that vision will be achieved should be described thoroughly.
- Decide What Type of Equity
Will Be Offered
The sophistication of a potential investor may determine
what type of equity they are seeking.
Potential future financing rounds must be taken into consideration. Many venture capital deals use convertible
preferred stock, and an angel investor will probably want to hedge his risk by
taking preferred as well. If you can
negotiate common stock, then go ahead and do so.
- Define Roles Clearly
It is imperative that you and the angel agree on both
of your roles in the daily operation of the company.
Major problems in the not-too-distant future
of your company can be averted simply by communicating with each other clearly
in your initial talks.
Since you
presumably know an investor’s motivation, make sure you are able to accept his
role or compromise so that everyone will be happy with the arrangement.
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Whether you find your angel investment from your rich uncle
Ted or a prominent angel investor group, it’s important to know that the
universe of angel investors looks like and what you’re really shopping
for. If all you need is a little bit of cash to be on your way, then
perhaps looking to your friends and family is the way to go. However,
if you think what you really need is a partner to grow this idea to the moon,
it may be worthwhile to pursue a professional angel investor as not only a
source of funding, but also a mentor.
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Sources: http://sbinfocanada.about.com/od/financing/a/angelinvestor.htm