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Angel Investors

If you have a new company or need some financing, you may want to consider angel investing. This is similar to Venture Capitalist financing when it comes to the criteria that needs to be met for financing. The biggest difference is that angel investors usually want less control of your company, and are looking for a slower return on investment.

If you want private capital and are starting a new company angel investor groups might be a great source for securing financing. Consider the following:

This is not a bank. When you get money from an angel investor it is usually invested by a small number of private individuals, or by one person. The money is typically directly invested.

Angel investors will most often select small companies that are too speculative for a bank loan or too young for a venture capital financing to be interested in. It is usually something that the angel investor sees as being worth while, that they know something about or understand, and always something they believe has a good chance for success.

The majority of angel investors only deal in specific industry sectors. For example 30% tend to deal in Healthcare, 16% in Software, 15% in Biotech, 8% in Industrial/Energy, 5% in Retail, and 5% in IT Services.

Angel investing is a legitimate financing options as they are a significant contributor to the job growth in the US, as they invest in start up companies. It is shown in recent studies that in 2010 370,000 new jobs were created in the US by angel investors. This is 61,000 companies in 2010 that received angel investments, a total of over twenty billion dollars from angels were invested.

If you are considering seeking angel investing, it is important to realize that you can'tjust be an idea, you have to prepare for it much like you would for any other type of funding. Do your market research. Know your own strengths and weaknesses as well as those of your competition. Have a well thought out and well written business plan. Create a marketing plan, and a pro forma. Basically, create whatever it takes to show that you have a clear idea of what you are getting into, what it is going to take to succeed, and how you plan to approach the market in order to do so.

If your idea is good enough, your plan solid, and the market right, angel investors are likely to be interested in your company, and will be willing to invest start up money, and wait until your company is off the ground for compensation for their investment.

Angel investing may not be the right financing for your company. In order to know, it is best to do your research, look into the various financing options for start up businesses and small businesses, and then determine which is the best fit for you and your company.

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