Angel investors are wealthy professionals who invest in startups, often in return for a piece of your company. They are highly beneficial to new businesses, and offer more than just monetary assistance. Many angel investors are former business owners and professionals who can offer their valuable experience and advice to help your business grow.

How The Angel Investor Gets Its Wings

An accredited angel investor has a net worth of at least $1 million or makes at least $200,000 each year. Some choose to invest independently. It is becoming increasingly common for angel investors to participate in angel groups, or groups of investors who work together to find, research and make deals with businesses to contribute funds in return for equity.

Unlike venture capitalists, angel investors make smaller contributions from their personal savings or income. You can expect an angel investor to contribute anywhere from $5,000 to $500,000. In return, you may sell between 10 and 50 percent of your company. It is better to sell only a small portion of your company to avoid forfeiting your freedom to make decisions.

Where To Find An Angel Investor For Your Business

You might be lucky enough to meet an angel investor by networking at your local Chamber of Commerce or Small Business Development Center. Otherwise, you can approach one of the hundreds of angel groups in the country and set up a presentation to introduce your business to a room full of investors from different industries.

You will probably find your investor in an angel group. These groups are accessible to almost anyone, and they tend to review hundreds of deals every month. This means you will have to stand out amongst those hundreds to prove that your deal is different, and truly profitable for the investor. For the best chance at getting in, start by sitting down with at least one of the members to talk about your business. You will have a much higher chance of making a deal if you get at least one member interested in your pitch before you present to the group. 

Pitching To Angel Investors

When presenting to a room full of investors, you can never be too prepared. You will only have ten minutes to convince an angel group that your company is a smart investment. Most investors decide on whether or not they are interested in the first minute. Your presentation should captivate your ideal investor almost instantly.

  • Start with your elevator pitch.  Be very clear about exactly what your company does. If the investors cannot figure out what you do in the first ten seconds of your presentation, you will have lost their interest.
  • Be flexible. During your presentation, you do not have to be specific about how much of your company you are willing to sell. This can be discussed at a later date. You should also be open to changing your business plan with your investor’s highly valuable advice.
  • Show how your product or service solves a problem. At this point, you should have a solid idea of how your product will serve your customers and why they will choose to do business with your company.
  • Know your market. You should know the approximate size of your target market and how you will reach them. You should estimate your market share and have figures based on how much you will be able to sell.
  • Prove the benefits of your business by focusing most of your presentation on how your investors will make money. While you cannot make firm predictions about your future sales or even know for certain of how your business plan will change over time, you should be able to demonstrate to investors that your business is fast-growing and profitable.

If your business is past the startup stage and has a growing customer base, yet still needs funds to expand, you might be ready to seek funds from an angel investor. It will take several months to close a deal and receive the funds, so once you feel you can offer investors a truly attractive deal, apply to angel investor groups so you can take your business to the next level.