How can I get angels to invest in my company? Angels are private investors who look for promising new companies to invest their money in. Generally they invest in businesses close to where they live and there are many local angel groups in many areas. They are investors with their own money who are looking for promising businesses to help start up for an equity in the business. They usually want to have an exit plan once the company is firmly on its feet.
Angels are generally successful entrepreneurs themselves and so have experience with starting businesses up. They have the experience to see great business ideas and sometimes offer their expertise to help with business advice. They can be the help from heaven your business needs-thus the name angels.
It is critical to get your business considered by an angel group to find a referral. Check around in your network of people for friends or others you are acquainted with that know angel investors. It is a good idea to ask your attorney or business friends who they know as it is always a foot in the door to know someone in common.
In order to get angels to invest in your company you need to do your home work on the local angel groups in your area. Find out which businesses they specialize in if any and what their normal meeting times are. Make sure you find out any procedural things such as forms they want you to fill out or questions you will need to answer to be considered. Most have websites with information for you to learn the answers to these questions.
Not all businesses are right for angel investors. There are some important questions you must ask to see if an angel investor is right for your business.
- Am I willing to give up some of the ownership of my company to a partner type situation with the angel being in control to some degree as it is his money being invested?
- Will my business realize a profit in 3-7 years? Most angel investors want to see their money returning in this time frame
- Am I willing to take advice from investors and receive board of director’s decisions I may not agree with?
- Am I willing to accept an exit plan which may include my selling the business to someone else in 3-7 years?
- Angel investors look for specific things to make their decisions about which companies get their money.
Here are ten things that angel investors will be looking for:
- Is your product almost near completion?
- You have existing customers or customers who have said they will purchase your product
- You have invested your own money and exhausted all other resources at your disposal i.e. family or friends
- You can demonstrate that the business will grow rapidly and create 15-30 million in revenues in 3-7 years
- You have a strong management team
- You have a great business plan
- You have an exit plan for the investor in less than 7 years
- You have a unique product or service with a broad customer base
- A clear market picture with a market penetration plan
- There is a strong potential for return on the investment