How to attract an angel investor

An angel investor is usually an affluent individual, who provides capital for a business start up. These angel investors will front money to the start up business, in exchange for convertible debt, or ownership equity. Angel investors are increasing in number, and are beginning to organize themselves into angel groups, or angel networks, in order to share research, and pool their investment capital. Start up businesses often find that an angel investor can bring money and expertise to the running of the business. However, the world of business funding is competitive and it is important to understand how angel investing works. There are certain factors that will more likely entice an angel investor, to fund your business. By knowing these factors you can then use them to your advantage. Here is what you need to know about how to attract an angel investor-

• Have a clear cut business plan-An angel investor will take the money they have made and then invest it, into a start up or small business, in order to get huge returns on their investment. This means that in order to impress an angel investor you should have a well thought-out, and well-written business plan. This will help to give the angel investor, a better understanding of your business, and what you hope to accomplish, with your business. Keep in mind that the more an angel investor, understands what your business is, what your business sells or offers, and the goals that you have for your business,the more likely they will be to invest their money,into your business.
• Find angel investors that have the same background or interests that your business is dealing with. The reasoning for this is simple, if you have a business that has something to do with technology, and then you should look for angel investors that have a technology background or have even invested in other technology businesses, because they are more likely to invest.Because of this many angel investors will look for businesses, that they are familiar with or that they would like to keep an eye on. This is especially true if they are already invested in similar companies, because this gives an angel investor more of an opportunity to make more money.
• Offer strong management-Angel investors like to invest in businesses that have a strong management. They understand that they are not just investing the in the idea, but in the people behind the idea. A strong management team, (that the angel investor likes), will be more likely to get the angels funds. The bottom line is that an angel investor is taking a risk in investing any of their money, into any start up business, but when an angel investor feels confident in the management, it may be easier to take that risk.
• Have a clear financial plan for your start up business. You should keep in mind that angel investors don't like to invest in a start up business that looks like it will always be needing or wanting more money, besides the original investment. The angel investor wants to see some returns on the money they have put into your business. You should understand that if your business financial plan looks like a money pit, angel investors will be more then likely to turn you down, and seek another start up business to invest in.

By knowing these factors and utilizing them to you full advantage, you are much more likely to attract angel investors, for your business. Finally, remember that angel investors are most likely to invest in businesses that they understand, and that they see helping them make more money.