Who are angel investors? Historically, angel investors were affluent individuals who financed theatre productions. Today, angel investors are typically wealthy private investors who, acting alone or in organized groups called “angel networks” invest their own money in revolutionary business ideas, usually in exchange for ownership equity. Generally, the range of angel investor financing is US$25 000 to US$100 000 for an individual and up to US$1 million, or more, when acting in an angel group.
So, does your idea of a product or service fit the angel bill? Maybe. Nonetheless, don’t deem your idea worthless just because it may not be “revolutionary” per se. Most investors realize that true revolutionary business ideas are a rarity. The bottom-line is money. Angels are interested in innovative ideas, new or improved that can generate significant returns. Given this, if you have a good business idea and are looking for funding, an angel may just be the equity partner you need.
But, how do you convince an angel investor that your business venture is the next best thing since sliced bread? In short of a miracle, this feat may seem impossible. Well, impossible it is not, but let’s be honest here, it’s certainly not easy. Before you ask for funding, it is critical that you understand exactly what it is that an angel investor seeks in a potential business opportunity. Consider the following 10 angel “look-fors”.
- A product or service that fills a MAJOR market need (a business idea that solves an existing problem)
- Competitive dynamics (the uniqueness of your idea and the competitive advantage over like products in the marketplace)
- Market size (the bigger the better)
- Market penetrability (the ease with which the product or service can be brought to market)
- Sales plan (how will you turn your idea into money)
- Use of capital (how will you spend the money you get)
- Numbers (do the math to make sure everything adds up)
- A promising future (long-term financial projections)
- An exit mechanism (an easy way of “cashing in” on the company)
- Entrepreneurial spirit (passion, confidence NOT arrogance, and perseverance)
So, before you call upon an angel for help with your funding needs do your research and know all the facts.