| If your business is too new, too risky and unproven, or | | | | work. Be sure to dedicate enough time and budget in |
| too offbeat to qualify for traditional bank financing and | | | | your search for financing. |
| attract venture capitalists, you may want to look for an | | | | Once you find a prospect, send a letter requesting a |
| "angel." Although the figures vary widely, angel | | | | short meeting to discuss the proposal. A more |
| financing is believed to provide billions of dollars in | | | | effective approach is to be personally introduced to |
| capital to entrepreneurs every year. | | | | the angel investor by a common friend. People are |
| If your company is too new, too risky and unproven, or | | | | more inclined to be receptive to offers from other |
| too offbeat to qualify for traditional bank financing and | | | | people if the request come from people whom they |
| attract venture capitalists, you may want to look for an | | | | trust. |
| angel. An angel is a private investor, often a successful | | | | In the event that the prospective angel shows interest |
| entrepreneur, who invests in small businesses close to | | | | in your business idea, make sure that you have |
| home for a variety of economic and personal reasons. | | | | prepared a well-researched detailed business plan. |
| Usually, angels are friends, relatives, or colleagues. | | | | Your plan should emphasize why you need additional |
| Successful entrepreneurs, especially retired ones, are | | | | financing and exactly what you plan to do with the |
| especially likely to become angels. | | | | money. Write an executive summary for the plan that |
| Although the figures vary widely, angels are believed | | | | spells out in one page why someone should invest |
| to provide billions of dollars in capital to entrepreneurs | | | | money in your business. Explain too, how you can |
| every year. Based on demographics, studies | | | | repay the money and when. Better yet, have |
| characterize angels as follows: They are wealthy | | | | presentation materials ready based on your business |
| They are usually self-made as opposed to inherited | | | | plan in order to have a more effective discussion with |
| wealth Is usually in their sixties; almost never below | | | | your prospective investor. You want to appear |
| forty Angels prefer to invest in companies they are | | | | relaxed, confident and knowledgeable as possible. |
| familiar with. They usually seek out small and growing | | | | If the investor is interested, bring in your lawyer and |
| companies in their own industry. | | | | accountant to the negotiations. Informal investors |
| How do you find an angel for your business? Here are | | | | usually invest from $10,000 to $100,000 in each venture. |
| some tips: 1. The first place to look for is among your | | | | While angels may be able to invest considerable |
| business associates. You have a greater chance of | | | | money in your venture without requiring the kind of |
| securing financing from people who knows you. Then | | | | documentation that other investors do, put your |
| ask your business associates to ask their | | | | arrangement in writing to reduce misunderstandings. |
| acquaintances. However, the farther the relationship | | | | Angels may prefer to make straight loans at rates |
| and the lesser the prospective angel knows you, the | | | | comparable to banks or slightly higher rate. They |
| lesser the chances of securing the investment unless | | | | generally expect to lend their money from three to |
| they have a unique understanding of your product. | | | | seven years, with some guaranteed exit provisions |
| 2. Network, network and network. Join a professional | | | | such as mandatory buy-out. |
| organization or trade group for your industry. Begin | | | | Others may want to be repaid in stock if your |
| attending meetings on a regular basis. This is the best | | | | company eventually goes public. Be sure to tailor the |
| way to get acquainted with successful business | | | | financial arrangements to fit your angel's needs. |
| owners in your field. | | | | Angels can also provide you, not just with money, but |
| 3. Stay local. You don't need to go beyond your | | | | guidance, advice and a mentor relationship. Also called |
| geographic area to find investors willing to take their | | | | "advisory investors," they are generally not interested in |
| chances with your venture. | | | | controlling the business, but may require you to meet |
| 4. Discreetly inquire about people who appear to be | | | | certain business goals or follow certain business |
| the most successful members of your industry. Pitch | | | | practices. If possible, encourage your angel to become |
| the idea to your lawyer or accountant - they may be | | | | a member of your informal advisory board. Many |
| interested or know someone who could be interested. | | | | angels like to keep a close eye on their money; plus, |
| They may have clients who frequently invest in a new | | | | they can offer you invaluable advice. If your angel is |
| and growing business. | | | | well connected in the local business community, he or |
| 4. Research on the Internet. Some sites provide listings | | | | she may help you find additional investors, introduce |
| of angel investors per geographical location, while | | | | you to a banker or an attorney, or bring in new |
| others provide focused advice on getting investors for | | | | customers. An angel may also help you gain |
| your small business. Check out the following sites: | | | | membership in a club or professional society that will |
| vFinance Directory of Angel Investors: http:/ | | | | benefit your business. |
| www.vfinance.com International Angel Investors | | | | Remember that every relationship is different. The key |
| Institute: http://www.angelinvestors.org Venture Vortex: | | | | to success is doing everything you can to increase |
| http:// www.venturevortex.com However, the rule is | | | | your angel's comfort level so the person's investment |
| always to raise money at the right time. Convincing | | | | and relationship with you and your business will be |
| angels (or anyone else) to part with their cash to | | | | longstanding and profitable. |
| support your venture takes a lot of time and hard | | | | |