Angel Investors - An Introduction
Angel investors are those investors that are specifically seeking to invest in alternative investments like startup ventures or investing in established business' expansion. An Angel Investors motivation towards Angel Investments is to primarily diversify their investment portfolio by investing in innovative startup entrepreneurs with a basic philosophy: "greater risk = greater rewards". This is the traditional way at looking at an Angel Investor; however, surprisingly most experienced Angel Investors will look at investments into an Entrepreneur as less risky than investing in shares as with a small business that operates in a sector that they know and understand will provide them with a business platform that they can exploit and leverage their business experience, resources, network, suppliers and investment directly. The rationale is simple, an Angel Investor can control and turnaround a small company from the brink of liquidation, but will not have any control over a blue chip company like Vodafone, no matter how many paper shares they own.
Instead of taking a personal guarantee or loan agreement with interest payments an Angel Investor will invest their own funds and take ownership of company equity or take on some form of debt in the company which can include convertible debt. For larger investments that may cross GBP 250k - 1m, angel investors may band together and form Investor groups and networks known as angel investor groups or Angel Investor syndicates.
Businesses or entrepreneurs that are seeking funding for their expansion will approach these Angel Investor syndicates by sending them their investment proposal. From there, an Entrepreneur or small business will have to pitch their business and an angel investor will decide if there if the entrepreneur is investable. It is important at this stage that entrepreneurs and small businesses looking to raise angel investment understand that Angel Investment deals do not happen overnight. It can take anywhere up to 6 months to structure a single deal as most angel investors will be very busy running several other businesses, and will not place angel investing as a full time occupation. There are many reasons why an Angel investor may choose to invest in an entrepreneur's small business and most commonly this will include looking for an entrepreneur that they see possesses a fire and a passion to grow their business; that the entrepreneur is willing to do what it takes to make a business succeed and ultimately find the angel investor that chooses to invest in them a good return on their investment, hence the general consensus that Angel Investing is a high risk alternative investment for an Angel investor.
How do you find an Angel Investor?
Now begins the problem. As an entrepreneur that is looking to raise Angel investment you will find it increasingly difficult to approach an Angel Investor that is interested in talking to you as most established Angel Investors will receive over 20 business plans a day. So unless you have been specifically referred to the Angel Investor by a third party that he/she knows you may have a problem locating viable Angel Investors no matter how good you may think your investment proposal is.
Locating these Angel investors by using services like Linked-in can prove to be very expensive, after all, where do you start from in finding an private investor from a database that boast to have 100 million professionals registered to it? Worse still, high net worth individuals are not definable by age, race, creed or region.
A better way is to join a trade organisation or business organisation, and to also attend meetings held by these organisations regularly. The main way to find and locate an angel investor is to talk to everyone in your personal network including friend and family. Ask them - do they know of anyone that may be interested in a potentially profitable venture in your industry?
If you are looking to find an angel investor in a fat and streamlined fashion but do not feel confident enough to meet strangers at trade fairs etc then using an established service like Venture Giant to find you an angel Investor could be the way forward. Venture Giant has over 1000 Angel Investors and angel syndicates registered to them now with a combined investment pool of over 500m pound sterling, and these Angel Investors have all signed up to Venture Giant to receive investment deal flow from entrepreneurs. What is best about Venture Giant is that they will not ask you to submit your whole business plan to them which protects your security - instead they simply ask for an investment summary of your proposition that is no more than 3000 characters long. If it meets their criteria, they approve it, promote it for six months, and will instantly send it out to all of the angel investors that they think would be interested in your investment proposal. This is something that only Venture Giant can do, because they have built and groomed their own Angel Investor database, they have streamlined their own platform to send Angel investors investment deal flow from their own platform.
Submitting an investment proposal is quick and easy, and they only charge a success based fee of 99 pound sterling if they are successful in finding you an interested Angel Investor. During the six months that they promote your investment proposal, if they locate more Angel Investors for your investment proposal then all of these Angel investor contacts will be included in your GBP 99 fee.
You may be able to locate Angel investors from your own social circle or by using online tools like Facebook or Linkedin or by even leveraging your own business network. The consensus view on getting an Angel Investors attention is to let as many people as you know, know about your business plan and do not keep your funding requirement a secret as it could be a real opportunity for someone you know. Quite simply, if you are a person that people respect and people wish to help, then they will recommend you to their friends and business associates for them to review your business plan or to hear you out and that can be all you need to get your foot in the door for an Angel Investor to consider your investment pitch. The proposal is the most important part of your pitch, so make sure you are 100% serious about raising funds for your business before talking to your friends and family or approaching a service like Venture Giant with your investment proposal.
Another pearl of wisdom is to prepare for your meeting in the right way. Before meeting with an Angel investor, use a service like Getinvestorready.com which charges a low fee of 29.99 pound sterling to review your investment pitch, and will get you investor ready. It's an effective low cost tool that is recommended by Venture Giant and Angel Investors alike.