Angel Investor Capital

Video Tips on How To Obtain Angel Investor Capital

You can still obtain angel investor capital during a recession, it just requires you to be more diligent in seeking funding.  The following video gives some useful tips for getting angel investor capital in a bad economy.  Among the most useful tips is anticipating a skeptical investor.  Meaning that you should look at your business proposal from the standpoint of an investor who is trying to narrow down his prospects by looking for the negatives and risks rather than the potential.  This will help you be more realistic and to avoid driving off any investors.

Also, companies should highlight their money-making aspects that will be most attractive to the investor.  Set clear objectives and milestones for your company.  By following the strategies recommended in this video you should have a better idea of how to obtain angel investor capital.

Meet Angel Investors

Tips for Meeting Angel Investors

Meeting angel investors is difficult but it is possible with some patience and by utilizing diverse networking strategies.  Here are some useful ways to meet investors:

• Obviously if you’re on this website you know that the internet is a great tool for meeting investors and learning more about your area of investment.  The internet is especially helpful in meeting angel investors because there are a number of great angel investor networks online.  For a comprehensive list of angel investor networks please see this page.
• Another way to meet angel investors is by attending an angel investor event.  Often you are guaranteed to meet angel investors if you pay a fee and then you can even make a presentation to potential angel investors.  This can be a great way to hone your elevator pitch skills and gain valuable feedback on your business proposal from angel investors.
• Although some people do not think that paying for a listing is beneficial, it’s one option to get your name out there and connect with angel investors.
• Reach out to potential intermediaries that could introduce you to a high-net-worth individual or a group of angel investors.  You could ask your friends, former colleagues, law or accounting firm and anyone who may be able to direct you to some investors.
• You could refer to a broker to arrange for you to meet angel investors but there is the possibility that the broker won’t help you find any worthwhile investors and still charge you a hefty fee–so be careful.

These are some tips to meet angel investors.  Although you may strike lucky occasionally, I think these strategies are more likely to yield results than a mass e-mail or cold call.

Additional tips from IQ

Angel Investor

Great Tips Any Angel Investor Can Use

The AngelConf this year provided some great insights to angel investors.  A great group of successful angel investors were the speakers at the conference and they imparted knowledge on other angel investors.  Venture Blog shares the best of the advice that any angel investor would benefit from following:

• [My personal favorite]It’s a small community — if you screw one entrepreneur, you’ll be out of the angel business because entrepreneurs talk (Conway)
• Angel investing is about learning on the job, which means that you can plan on screwing up your first 10 deals at least (McClure)
• If you assume that the money is gone once you’ve invested it — that it is like a lottery ticket — then you will have a better time angel investing (Buchheit)
• Work with other angel investors so that you can get the advantage of their expertise (Zurich)
• There is no rational way to arrive at valuation, so don’t be overly concerned about getting it right (Graham)
• Don’t worry if the idea seems crazy — if it didn’t seem crazy, it would be too late to invest as an angel (Graham)
• The lifeblood of angel investors is deal flow — you need huge deal flow to find enough stuff that is worth investing in (Ravikant)
• The best deals come from other angels (Ravikant)
• Don’t be afraid to throw a little dynamite into the status quo and see what comes out of it — often times interesting stuff emerges (and sometimes nothing does) (Dearing)
• The Rule of 12 — you need to invest in 12 companies to have statistical diversity — invest in fewer than 12 deals and you run the risk of them all failing (Maples)
• Like in the movie “Oceans 11,” you want to pull together the best team of angel specialists there are out there — it increases the likelihood that the company will succeed (Maples)
• Help bring your entrepreneurs together so that they can learn from one another (Poler)
• * By being a connector, you will see the most interesting stuff and work with the most interesting people (Senkut)
• Angel investing is all about the syndicate — you can lead if you want to but it can be lonely until others join in the syndicate (Clavier)
• Angel investors need to distinguish themselves from others with money — what do you bring to the table? Contacts. Experience. Advice. (Young)
• Only invest in stuff you actually know something about — otherwise you’re just buying a lottery ticket (Young)

Source

Entrepreneur Risks

Angel Investors that Entrepreneurs Should be Wary Of

Angel investors can help grow your business and while they are often beneficial there are some types of angel investors to look out for.  These angel investors will often to do more harm than good for your business.

Angel Investors To Avoid:

Control Freak Angel Investor:  This angel investor is a great source of capital but the moment your business hits a pothole, the investor is ready to start controlling your business.  The control freak angel investor usually relies on special clauses in the contract that give him more power if you fail to perform a duty.  This is how a control freak attempts to take over your business and run it as his own, thus creating a tension between his tendency to interfere with the entrepreneur’s creative control.

Micro-Manager Angel Investor: On the surface, this looks like the ideal investor; he wants to lend you the capital to grow your business and he offers his expertise, for free.  However, after a while it becomes apparent that this investor tries to involve himself in every aspect of your business.  The angel investor will either annoy you by trying to offer help in the simplest tasks or he will be so worried over his investment that he checks on every single operation.  While some micro-managing angel investors will simply exit the investment, it’s not always the case.  Some become litigious investors.

The Litigious Investor: The litigious investor knows you lack the funds to fight a lengthy court case so they will look for any opportunity to take you to court.  Rather than helping your business succeed, this type of angel investor tries to squeeze money out of you through threats, intimidation and legal action.  The litigious angel investor looks for the slightest error–failing to send him stock certificates, failing to keep him informed in a timely manner, etc.  Some entrepreneurs certainly should be taken to court but there are some angel investors that exploit this means for their own gains.

The Street has some tips for avoiding these nightmare angel investors:

• Whenever possible, only accept investments from credible, professional investing organizations — not private individuals.
  
• If you are a raw start-up and have no choice but to accept investments from private “angel” investors, do the following: Ask what other companies they’ve invested in and talk to the CEOs of those companies to find out what kind of investor they’ve been. Also, make sure your lawyer writes the investment document — not your investor. This document should be standard for all your investors and not negotiated on a one-on-one basis. Watch out for any attempts to add clauses that can come back to bite you. And don’t eat any soup that tastes funny.
  
• Whenever possible, hire an investment banker to prepare a proper Private Placement Memorandum that’s consistent with National Association of Securities Dealers requirements. We generally refer to PPMs as “anti-investment” documents because they warn the investor about everything that could potentially go wrong, minimizing any basis for a lawsuit.
• Divide your investors into two categories: pure investors and those you feel may bring additional value. For those in the first category, don’t encourage or allow them to “get actively involved” in the company. Be polite but firm in telling them you’ll keep them informed of your progress through written means only. If you want more active involvement, you’ll ask them to formally join an advisory board or the board of directors. However, if you do so, there will be strict, written guidelines as to what is expected.

Source: Angel Investors provides detailed information on Angel Investors, Find Angel Investors, Angel Investor Networks, Angel Investor Groups and more.

Finding Angel Investors

Five Tips for Finding Angel Investors

I was just talking with an entrepreneur frustrated that he cannot find angel investors, I offered him these suggestions for getting an angel investor to provide you with capital:

1. You never know when you will have the opportunity to meet an angel investor so have a well-prepared, concise elevator pitch.
2. Reach out to angel investors networks, you may be able to connect with an interested contact.
3. Look for angel investors conferences where entrepreneurs are allowed to propose their idea to interested angel investors, for a fee.
4. Have a thorough, professional business proposal.
5. Network with high net worth individuals and investors through linkedin.com or similar networking sites.

This should get you on your way to meeting some angel investors, but it is difficult so be prepared for a difficult process.  Good luck!

Angel Investors Networks

Trying to find an angel investor can be difficult, if you don’t know where to start. Angel investor networks help you court angel investors by specific interests or regions, a good starting point for your quest for capital. So here is a comprehensive list of angel investor networks separated by geographical location:

National Angel Investor Networks

• Active Capital: Restricted to only entrepreneurs that can sell securities in their company, also some businesses cannot join based on industry or the company structure. Helpful for companies raising $1 million or less, but has potential for up to $5 million. Fees: vary by state.
• Investors’ Circle: A nonprofit angel investor network that focuses on socially responsible businesses. The target industries for entrepreneurs are: energy and environment, food and organics, education and media, health and wellness, community and international development. This angel investor network does not permit companies raising more than $10 million. Sign your company up before August 1st to be considered for the Fall Venture Fair.
• Tribe of Angels: Jewish angel investor and business network, focuses on smaller investments ranging from $50,000 to $1 million.
• The Gathering of Angels: An opportunity for startup companies to show their business proposal to accredited angel investors. Six companies present for 20 minutes followed by 2-5 minute Q&A with the investors. Also included is three hours of virtual coaching to prepare for the proposal. Fee: $2,500.

Pacific Northwest Angel Investor Networks

• Portland Angel Network: This network favors early-stage investing and you must be based in Oregon or Clark County, Washington.
• Alliance of Angels: Companies must be headquartered in the Pacific Northwest. This is a members-only site where you can view business proposals, and there is no cost for submission or screening of business plans.
• Vancouver Angel Technology Network: Introduces early stage technology companies to investors, all located primarily in British Columbia. The angel investor network consists of seasoned technology veterans and 30 to 40 usually attend the meetings where companies meet angel investors.

Southwest Angel Investor Networks

• Arizona Angels: Invests exclusively in Arizona-based companies, with over 100 angel investors.
• Desert Angels: Similarly focused only in Arizona companies, but with only about 50 angel investors.

Northeast Angel Investor Networks

• Common Angels: Limited to Boston area companies, this large angel network favors early-stage software companies.
• Maine Angels: This angel network is ideal for companies hoping to raise from $50,000 to $250,000. Although the Maine Angels tend to invest in local companies they are open to other locations.
• Silicon Garden Angel Investors Network: Invests in East Coast companies with a somewhat smaller than most networks’ average investment ranging from $20,000 to $250,000.
• Tech Valley Angel Network: This angel investor group invests in early-stage businesses in northeastern New York and New England.

California Angel Investor Network

• Fast Angels: Tech focused group that invests primarily in Silicon Valley companies. Motto-”Act Faster, act smarter.”
• The Angel’s Forum: Invests in seed and early-stage business ventures. The Angel’s Forum invests primarily in consumer products, enterprise software, industrial products, Internet and e-commerce, medical devices and service, as well as clean-tech.
• Band of Angels: Large and established angel network invests in a variety of high-tech companies with over 100 angel investors.
• Sierra Angels: 50 member strong angel group that focuses on companies in the Northern Sierra region including Nevada, California and other close locations. The average investment ranges from $250,000 to $2,000,000.

South Angel Investor Network

• The Network of Business Angels and Investors: Invests in traditional and technology companies. Georgia-based.
• Houston Angel Network: Nonprofit organization that links startup companies with accredited angel investors. This angel investor network invests in companies based in Texas or willing to relocate to Texas.

If you have any additions please e-mail me at Theo@peblogger.com, also angel investor networks that would like to provide their own brief summary can contact me.

Angel Investors

An angel investor is a wealthy individual who provides capital to an expanding small business. An angel investor typically invests his own private money, unlike collective venture capital funds. The angel invests in the startup process and has a personal stake in the company’s success. Similar to venture capital investments, angel investors are vulnerable to a high risk of failure, but if the company is successful the possible returns are equally high. Startup businesses often fail, costing angel investors large sums of money. Angel investors compensate for this by demanding a high percentage of any success. Angel investors are an important way for small businesses to gather the capital necessary for major expansion.