Who is an angel investor?

When your small business needs investor, a good choice may to be look for an angel investor. Angel investors are the largest group of private investors, in the business world today. However, it is important to understand who an angel investor is and what they are looking for. Here is what you need to know about who is an angel investor-

Understand who you are looking for-Studies have shown that your chances of connecting with an angel investor, will be much better if you keep the profile of the "typical" angel investor in mind. The "typical" angel investor:
1. has an income that exceeds $100,000
2. is 40 to 60 years old
3. usually has a net worth in excess of $1,000,000
4. has had previous successful entrepreneurial experience
5. expects to hold on the investment for up to five to seven years (although some angels wish to "cash out" after only a few years)
6. enjoys advising the entrepreneur and likes to be part of the action
7. invests up to $150,000, but may also participate in a syndicate of other angel investors, bringing the total investment to multiples of individual investments
8. refers deals to other private investors, even if the angel has chosen not to invest
9. likes to invest in an industry with which he or she, is familiar
10. usually sources deals through referrals

The overriding factor is that most angel investors look for businesses with growth and export potential. They also understand that it may take several years before their investment will pay off; however, they also expect to be well compensated for their risk.

• Look locally for an angel investor-Because most angel investors want to play an active role in their investment, they are much more likely to invest in businesses that are in close proximity to them. An angel investor may want to be close enough that he or she can drive over and talk to the business owner.
• Work on networking-You will most likely need to be referred to an angel investor. They are generally not just hanging out waiting for investments. You need to find the right person who can refer you to the angel investor you are looking for. One of the most helpful ways to do this is to immerse yourself in your local business and social community. You want to focus on business owners, since these are the people who might be, or become, angel investors themselves, or know an angel investor. You should join business and trade organizations, and regularly attend the meetings. In addition joining civic and community organizations are also great for networking. It can also be helpful to attend trade fairs and events. You want to get your face and your name out there, and meet as many people as possible.


• Remember that a lot of angel investor don't work alone-While there are some angel investors who invest entirely on their own, there are many more who operate as part of an informal network, or syndicate, where they can pool their resources, and share the risks. It can be helpful to check with the business alliance where you live; since there may be an active group of angel investors in your community.


• As a last resort-turn to the internet-If you are unable to find an angel investor in your community, you may want to try and find one on the internet. You may be able to hook up with an angel investor through one of the web sites that provides entrepreneur and angel investor matching. While it may not yield immediate results, at least you can at least get your business proposal before a wider audience.