Today’s Tip
Best Practice: Angel investors want to invest in a winner. Create an award-winning business plan. One that excites them and shows success.
Today’s Article: Access to Capital – Angel Investors
Angel investors are high worth individuals that invest in local smaller companies. Angels contribute capital to the business in return for debt repayment (loan) or partial company ownership (equity). Because of their business experience, many angels invest more than their money – their expertise. Angel investors are generally individuals that have a minimum net worth of one million dollars not including their residence.
Advantages to Angel Capital
1. Open to investing in starts-up and existing businesses
2. Access to not only collateral backed capital, but also no collateral or operating money
3. Interest in investing locally
4. Business may get more than capital, also angel’s personal business expertise
5. Business may get more than capital, access to others in their business network
6. Potential future funding
Disadvantages to Angel Capital
1. Debt (loan) source of money can be at a higher rate of interest
2. Equity source of money means giving up some ownership in the company
3. An outside individual is now involved in your company – choose wisely
4. Can take time to secure
Angel Selection You have two ways to find them: established angel network and local high worth individuals.
1. Local High Worth Individuals The key to finding an angel in your area is networking: first start with people you know, then contact local chambers of commerce, business organizations, accounting or CPA firms, financial advisors, local networking groups, local banks or financial institutions and successful professionals and business owners in the area.
2. Established Angel Networks
Angel Capital Association (ACA)
ACA is a non-profit organization with member angel groups and individual accredited investors that make investments in companies that fit their investment criteria.
Action Step: If you cannot raise all the money you need from other capital sources and are willing to pay a higher interest rate, angel investors may be an option for you with a strong business concept and a winning business plan. Click on the sources of angel capital below and research angel investors in your area.
Sources of Angel Capital: Click Here
Additional Resources
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