7 Tips For Obtaining Angel Investor Funding 


If you have a start-up company that is looking for up to $500,000 in financing, your best option is to locate and meet with Angel Investors. Angel Investors are people that invest their own money in start-up companies. Many of them started out the same way, as an entrepreneur with their own start-up company. They like the entrepreneurial spirit and are looking to fund a start-up or two and offer their own business advice and wisdom. Also, their financing terms are less painful that what a venture capital firm would offer and they can usually make a decision in a few weeks on whether or not they will finance your company. Now you know why they are called "Angels".

Venture Capital Firms, on the other hand, usually don't fund less than $5,000,000 and can take several months of reviewing your business plan and conducting due diligence before they even make a decision.

Here are 7 tips that should help you in your search for funding:

1. Have a Solid Business Plan. Make sure to put sufficient time, effort and research into your Business Plan. It will definitely show if you do not, and you will have wasted time in your search for funding. Ask business people that you know and whose opinion you respect to read it and offer their constructive criticism. If something isn't clear to them, or sounds too far fetched to them, consider making the appropriate revisions. You will likely edit and re-edit you Business Plan many times before it is presentable to investors.

2. Attend Investor Forums. Most states have investor forums, sometimes referred to as "Venture Capital Forums," even though they are open to Angel investors and entrepreneurs. These forums sometimes focus on a specific topic or are just opportunities for people to get together and network with one another and discuss different ideas. This is a great way for you to network and see who in your area is funding start-up companies. Sometimes these forums even choose a handful of companies to make presentations to a group of investors for funding purposes.

3. Talk to a Start-up Company That Recently Got Funded. Call one of the officers of a company that recently got funded. Ask him what he thinks made the difference in his company getting funded and what mistakes he think he might have made earlier. No sense making the same mistakes he made and learning the hard way, which could delay your company months in the funding process.

4. Learn From Each Investor That Says, "No, We Can't Fund Your Company." Ask investors what it was about your Business Plan they didn't like or why they felt it wouldn't be profitable. Don't try the hard sell approach and try to get them to change their mind. Instead, use it as a learning experience and try to correct the problem with the next investor.

5. Have a Professional Looking Website. Even if your company is a pure start-up, odds are you are going to need to have a website. Even if your product or service is not on the market yet, you should have a professional looking website that is at least informative and can tell the visitor your plans and at what stage you are currently. Maybe you could have a section called "Articles". In that section you could have articles your Management Team has written specifically for your site or that have been published on other sites. This will impress investors when they check out your site and it will give them a feeling that the Management Team really knows their particular industry well.

6. Write Articles to Establish Your Name in Your Particular Field. Writing articles is a great way to get your name out in the field. It also helps to establish yourself as an expert in your industry. Investors will like to see that you are a published author. This also shows your confidence and is a way of networking as well.

7. Join One or More Associations. If possible join an association in the field in which your business will be in operation. This will not only help you with your business plan, but will also help you with networking. Some states have Venture Capital Associations. They are not just open to large venture capital or private equity firms, they are also open to angel investors and entrepreneurs. Try to network anyway you can. Its a good idea to set up a folder just for this purpose to keep notes and make follow-up calls. Don't think that if you talk with 10 angel investors you will probably get funded by one of them. Unfortunately, the percentages for success are much lower than that. Try to set a goal of talking with 100 potential investors and as your list starts to build focus on the most likely candidates.

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