How can I get angels to invest in my company?

Many small business owners have a business that they hope will do well and are working hard to make it happen. One of the biggest problems they encounter is getting enough capital to expand the operations. It may be difficult to get the financing in the amounts needed to make the company grow as fast as desired or may be difficult to acquire for any number of other reasons. Some business owners turn to angel investors when friends and family are not able to give enough and when venture capitalists are too expansive for their needs. Here is what you need to know to get angel investors to invest in your company.

First you need to understand what an angel is and if they would even fit the needs of your company and its objectives. An angel investor is usually an independently wealthy individual (but could also be a group of investors, an LLC, a trust, an investment fund, or other type of financing operation) that offers start up financing for a business in exchange for a percentage of equity in the company or a convertible debt, such as a bond that can be converted into shares of the company. Some angels are even teaming up and forming groups that can finance more aggressive projects than one person may be able to do on their own.

But this type of financing is not right for every business. It is intended to fill in the gap between friends and family financing methods and venture capital. Some may be too small to draw the attention of the angels without significant effort and may not fit into the specifications outlined by the angel. Some are already too large to offer the growth rates that may be expected by such an investor or may fit into the realm of venture capitalist funding in much larger amounts. Venture capital firms will probably not even consider a company that doesn't need more than a few million dollars. Out of the 51,000 companies that received angel funding last year, the average amount of the financing was $500,000, which is much less that a venture capitalist would need to lend to consider it a good investment.

It is very important to make yourself visible to any company that would want to invest in your business. If no one knows about you it is impossible for them to make any kind of evaluation if you would be a good investment for them. There are many companies and websites online that can help you find an investor or company that would be able to take an application and evaluate you to see if you are worth the investment of their capital. There are many resources out there available to you and it is important to find out about as many as possible in the most effective amount of time.

One other very important aspect of getting an angel to finance your expansion is to make sure you have a logical business plan and accompanying presentation. You need to be able to "sell" your business to any potential investor. They have to see that you would be a better alternative to any other investment. This would include any financial statements you have (you should be keeping these no matter what type of business you run), profit information and projections, plans for expansion (i.e. why you need the money they would be providing), and any other information that would make the investor see that your company would be a good place to put their money. They will have to evaluate your business history and the projections of what is happening in your industry and all of the risk factors involved and negotiate to make sure they have a desirable amount of equity or profit in a specified amount of time.

Make sure that you are honest in your expectations of your business and that you don't make things seem rosier than they are because this ultimately leads to the failure of a business and maybe even civil and criminal charges.