How To Find Angel Investors for Small Business
Do you know how to find angel investors for small business? An angel investor is a person investing his or her own money in a promising company.3 min read
Do you know how to find angel investors for small business? An angel investor is a person investing his or her own money in a promising company, in contrast with professional money managers, who invest the money of other individuals or companies. Many angel investors are lawyers, doctors, and other wealthy professionals. Often, these individuals are retired and choose to invest in a field where they have special expertise.
Profile of an Angel Investor
The average angel investor:
- Is between 40 and 60 years old.
- Has an annual income of more than $100,000.
- Has a net worth of at least $1 million.
- Has experience as a successful entrepreneur.
- Plans to invest for a five-to-seven year term.
- Prefers to serve in an advisory capacity for the company in which he or she is investing.
- Invests up to $150,000 but may partner with other angel investors for more substantial projects.
- Refers deals he or she is not interested in to other angel investors.
- Finds deals through the referrals of others.
- Is not risk-averse but expects to be well-compensated for this risk.
Benefits of Angel Investors
If your business needs financial flexibility to grow, a cash infusion from an angel investor could give it a jump start. These investors provide substantial funds that can bolster your small company's development and growth.
Choosing an angel investor with targeted entrepreneurial experience in your industry can create a valuable mentoring relationship. This advice can often be just as valuable as the cash investment, if not more so.
Attracting Angel Investors
Your company is a good candidate for an angel investment if it has export and growth potential, even if it may take several years to realize this potential.
Because these investors tend to want to take an active role in the business, you'll be more likely to attract an investor who lives near your business location.
Angel investors depend on referrals from their trusted network to find companies in which to invest. This means you need to be active in your social and business community to make the right people aware that you have a business that's worth the time and money of an investor.
Business owners represent a good networking opportunity since they often become angel investors themselves or know others who are angel investors. Join your industry and trade organizations and participate in meetings and events. The same goes for community and civic organizations. Make your business a household name and meet as many people in the local business world as possible.
Many angel investors share resources and risk with other investors as part of an informal investment club. Your local economic development center or Small Business Administration office can advise you about syndicates of this kind in your area.
You may be able to connect with a potential angel investor online. Many websites provide databases to match angel investors with investment opportunities and vice versa. Signing up for this type of service will also get more eyes on your business proposal. Check out these websites:
- Angel Capital Association (ACA) has more than 1,300 accredited angel investors and 260 investment groups throughout the U.S. and Canada who are registered on its database.
- The BC Angel Forum matches pre-screened companies with investment opportunities ranging from $100,000 to $1 million.
- The Canadian Investment Network provides both free and premium services for companies seeking an investor.
- Carrefour Capital Connexion lets you search potential angel investors worldwide and register your project proposal for free.
- Gust, previously called Angelsoft, touts itself as the largest startup network in the world. Fill out just one application to submit to hundreds of angel investor groups. The platform has raised more than $1 billion in funding for new companies.
Keep in mind that networking will still be your most important resource. According to the ACA, about 13,000 investors are part of angel groups, although the Center for Venture Research reported about 150,000 active angel investors in the U.S. as of 2015. Searching LinkedIn for angel investors may also turn up interested professionals in your area. This platform also offers you a way to network with these individuals and showcase your company.
If you need help with finding angel investors for your small business, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.