Ways to attract an angel investor
Many businesses find that when traditional routes of financing do not work out for them that using an angel investor becomes a priority. These are wealthy investors who often provide the startup capital that many potential business owners are seeking. Most of the time angel investors will require a portion of ownership in your business in exchange for the cash that you are seeking. While many angel investors work alone others are organized into groups or networks where they can work together and often pool their resources.
Since angel investors most often invest in businesses that they are familiar with the major benefits of working with an angel investor are not only the cash but the experience that they bring to the business. However, the bottom line is that it can be very difficult to attract the interest of an angel investor. The competition for an angel investor is usually extremely high. The good news is that are factors that will help you to increase the chances of attracting the interest of an angel investor. Knowing and capitalizing on these factors can help you gain the financing that you need. Here are some ways to attract an angel investor-
- Have a well written business plan-Angel investors are most often experienced business people. This means that they will want to see that you have taken the time and made the effort to have a well researched and well written business plan. You want to be able to communicate effectively with the angel investor concerning every aspect of your business. Your business plan should be able to help you do that just that. If you have any chance with an angel investor your business plan will need to clearly communicate what your business sells, what your business goals are, and how the angel investor will be repaid for their investment.
- Provide strong management potential-Angel investors are savvy investors who know that they are not really investing in the product or service that a business sells but rather the people who run the company. You must be able to show any potential angel investor that the management of your company has the experience and expertise to make it grow and be profitable. Having the right people doing the right jobs will help to inspire the confidence of your angel investor that they are making the right investment by putting their money into your business.
- Have a concise financial plan for your business-Any angel investor who is looking at investing in your company will want to see not only what you are going to do with your investment but how you are going to provide them with the investment return that they are seeking. The bottom line is that vague numbers and guesswork will not cut it. You will need to be able to clearly back up your financial projections. In addition, keep in mind that if it looks like your business will continually be needing money then most angel investors will pass. Most angel investors are looking to only make a one time investment then sit back and wait for their return. If your business looks like a money pit they are far more likely to move on to another investing opportunity.
- Find an investor close to home-Most angel investors are looking for businesses to invest in that they have close physical proximity to. You need to keep in mind that if the angel investor can't check on their investment they are less likely to invest in your business. In addition, most angel investors will invest in businesses that they have some experience in so finding someone who has a background in the same area as your business will increase the chances of getting them to invest with you.