Angel Investor Funding for Start-up Business

Summary: Pulling-up one’s own resources just isn’t enough when starting one’s own business. Oftentimes, a greater influx of capital is needed to have your start-up business off the ground. Many established businesses have proven that angel investors are a great way to fund your start-up business.

Here are a few tips in finding, meeting and acquiring that angel investor your start-up business needs.

Any person with any idea in business would tell you that one of the most essential necessities in starting a business is having sufficient capital. In these hard times, pulling up your own resources just isn’t enough. This is why for many years there are certain people who are willing to invest in a start-up business by offering their capital and sometimes even management and business expertise. They have been termed as “angel investors”. The term “angels” were first used in England to describe individuals who used their own personal funds to finance theater productions. Today, angel investors finance a wider variety of businesses.

In return for the start-up capital that the angel investor is willing to put out, the angel investor would expect either part ownership of the business or convertible debt which is a bond that can be converted into shares of stock at a designated time. Aside from these there may also be other strings attached to an angel’s investment. Most angel investors would be expecting at least 10-30 times return of investment in the first 5 to 7 years because of the higher rate of failure in start-up businesses.

Having said this, you may wonder how one can meet and acquire an angel investor. Most times it is one’s friends and family that provide start-up capital. They are probably the closer and easier angel investors to find. However, if you want to find other angel investors, the best place to look for is referrals from other established business entrepreneurs who have found their own angel investor when they were starting their own business. Though there is no written list of angel investors, referrals and word of mouth is still the best way to get angel investors. Attending investor forums is also a great way to meet not only angel investors but also venture capitalists. Joining associations and organizations of business entrepreneurs and establishments would be a great way to connect with other businessmen and hopefully, angel investors as well.

Meeting and finding an angel investor is only one-half of the story. Making them invest in your start-up business is another matter. Having a well-prepared and organized business plan with five year projections is a must when you are meeting with angel investors. At the end of your pitch the angel investor must be convinced that your company is worth the investment. If an investor turns you down, ask him what the flaws of your business are so that you can try and fix it for the next investor.