Fine Points of Securing Angel Funding

Angel Funding Any wealthy individual providing financial backing for a business startup, typically in exchange for convertible debt or ownership equity can be termed an angel investor or more simply, an angel. Unlike venture capitalists, who control the pooled money of others in a special fund, angels usually handle their own finances. In many cases angel funding fills the gap in startup financing between "friends and family" who provide seed funding, and venture capital.

Angels provide equity capital, not debt, which must be repaid whether or not the business succeeds. Angel investment is only appropriate for two or three percent of small firms that show potential for profitable and speedy growth, because the expected financial return is usually so high. Apart from the aforementioned "friends and family" network, these investments can also happen in a marketplace, usually local, where entrepreneurs vie to get hold of some of the angels’ funding.

Angel investors normally put up anywhere from $10,000 to $250,000 in early stage businesses. They look for a sound business plan that plainly shows how the business will work. They want to know how soon the business will be able to see a profit. On the upside, they are generally more patient than conventional lenders.

Always set up meetings with angel investors in person. To secure an angel:

• Work out how much capital you need from the investor
• Search for angel groups online, and get referrals
• Find angels in your area with expertise in your industry
• Be prepared to discuss your projections, goals, and business plan