Where can you find business angels and what do they offer? In answering this question we must understand what a business angel is. They are simply people who provide businesses, usually start-ups, enough money to move up to the next level. Their professions range from retirees and doctors to business owners and executives, one may just even be your neighbour.
There are over a million such investors annually in the US pumping capital into businesses. So where do you find business angels? This is not easy. First, most individuals find these angels within their social network. Once your plan is solidified and it is ready to go, reach out to that network. Some steps to take:
- Check with family, friends and co-workers. Tread carefully though when getting into business with this group and do not be pushy.
- Once you have exhausted this network, you could possibly look into liquidating assets if you believe in your idea enough. Consider putting up some, if not all of the money yourself. Even if you can put up part of the capital, potential investors will like to see that you have enough faith in the idea and recognize that you have invested yourself.
- If the business already exists, send some feelers out to see if your customers may be interested in taking it to the next level. One of them may just be an angel investor.
- Post messages on message boards like Craigslist or forums. Perhaps start a blog on your search, get creative.
- Check for local companies in your area that assist individuals with looking for these business angels. Investors will want to meet with you, and usually try to stay within a 150 mile radius of their investment.
- There are websites that dedicate themselves to helping angels/investors find the right investment match. Be cautious of sites that give you too many empty promises. These sites are usually not free, and in the long run joining more than one could be quite costly.
- Last, scour the internet making connections and meeting new people. You never know who you might run into.
The common misconception out there is that angles will just put down the money needed to get your idea up and running. In fact, a huge percentage of angels do not just hand over the money, rather they will co-sign for loans. Co-signing for a loan is huge though.
It is not easy to get a business loan unless you have significant collateral or perfect credit. Also, remember that over 80 percent of investors will not go over the $500,000 mark. It is rare to see them go over $1 million.
If an angel investor does decide to put up the cash, they will usually do so in phases. Be sure your business plan is established with phases to the project. They will be watching the progress carefully and will not just put up their investment all at once.
Be sure you have a means to support yourself during this process as well. Nothing turns an angel off more than to find out you are living off their investment. The money asked for should go directly into the project and nothing else. Accountability is a major key.
In closing, network, network and network some more to create strong business relationships. This will not be easy. Practice your pitch on friends or family, read over your plan and cut out unnecessary expenses that may cause an angel to turn and run. And of course do not give up so easily, this process can take time.