What is angel funding?
Angel funding is the capital provided by the angel investors which may be an individual or a group of individuals. Angel investors are the wealthy businessmen who make high risk investments in the SMEs and start ups with the aim to earn high returns. Angel funding for start ups is a very good option for the start up businesses which find it difficult to get the funds on loan from the banks or other sources.
To get angel funding for start ups you first need to get in contact with the angel investors.
Here are some tips to locate the angel investors to get angel funding for start ups:
- Socialize in the corporate world. Be friend with other entrepreneurs who got angel funding for start ups. These entrepreneurs can prove to be the good source of information about the local angel investors who may provide angel funding for start ups.
- Promote your business through press conferences, websites and local media. This will bring your presence in notice of the angel investors who may show interest in angel funding for start ups.
- Talk about your business plans and requirement of funds with the family and friends who may help you by introducing to the angel investors who may provide angel funding for start ups.
- Enquire about the angel investors from the local and regional economic development agencies. These agencies may provide you with the list of the local and regional angel investors from whom you may get angel funding for start ups.
- Search for the angel investors on the websites. Those angel investors which are ready to take big risks may provide angel funding for start ups.
- Enquire about the angel investors from the business schools. They may the angel investors in their guest faculty and provide you a link to them. Once you contact the angel investors you may succeed to get angel funding for start ups.
- Investment forums may have a list of the angel investors who may provide angel funding for start ups.
- Enquire at the local chamber of commerce about the angel investors. They may help you by providing link to the angel investor’s organizations and networks which are interested in making angel funding for start ups.
- Approach the trade or professional associations which may provide you information about the angel investors interested in angel funding for start ups.
- Association of business incubators may help you as they also use angel funding for start ups to help their clients.
- Least but not the last your accountant and attorney may also provide information about the angel investors interested in angel funding for start ups.
- After locating the prospective angel investors who may provide angel funding for start ups, the next step is to contact them. The angel investors for angel funding for start ups may be contacted on phone or via an e-mail to fix up the meeting appointment.
Before meeting the angel investors for angel funding for start ups you must make following preparations to properly convey your business plan to the angel investor to get angel funding for start ups:
- Be prepared with the clear business plan for your start up venture to make an impression on the angel investor for angel funding for start ups.
- Get the competent, knowledgeable and efficient management team ready to gain the confidence of angel investors for angel funding for start ups. If the angel investors get convinced that the business is in the most competent people they may easily get ready for angel funding for start ups.
- If possible involve some of the businessmen known to the angel investors in the management team, this may also turn out to be favorable in convincing them for angel funding for start ups.
- Be prepared about any questions from the angel investors about market you wish to capture, your products and services, your competent, the capital needed in the start up phase, the short term and long term goals, business strategies. Once the angel investors get convinced that you have the concrete business planning they may provide angel funding for start ups.
- You must have return on investment calculations very clear and well estimated to impress angel investor and get him agreed to provide angel funding for start ups.
- Prepare the documents and the power point presentation for the angel investors to motivate and convince them to provide angel funding for start ups.
- Brief the angel investor about the exit plan which must be lucrative enough to motivate him to provide angel funding for start ups.
- If the prospective angel investor does not show interest in angel funding for start ups then you may ask them to recommend you to some other angel investor who may be interested in making angel funding for start ups.
Expectations of the angel investors who may provide angel funding for start ups:
As the angel investors make very high risk investment by angel funding for start ups, they expect high and rapid returns from the company.
- Angel investors for angel funding for start ups wish to have 15-30% ownership of the company. The ownership may be as the share in stocks or in the form of the convertible debts.
- Angel investors for angel funding for start ups also wish to have a commendable position in the board of directors. This helps them witness all the business plans and strategies and actively participate with their precious advice in times of crises.
- Angel investors who may provide angel funding for start ups wish to be well communicated about the growth, profits and loss incurred by the company. They wish to receive the monthly, weekly and quarterly newsletters and reports of the company mentioning any profits and loss.
- Angel investors who may provide angel funding for start ups also wish to make re-investment in the company. This may be the problematic condition as no owner wishes to give high percentage of ownership of the company to a single investor.
- To get angel funding for start ups you first need to get in contact with the angel investors.