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It's
a tough world out there
for entrepreneurs who
are trying to find
investors to get their
company to the next
stage.
Venture capital funding
for the third quarter is
at a four year low.
According to the Venture
One venture capital
survey, 464 companies
received $3.9 billion
dollars, and only about
a third of those dollars
were invested in early
stage companies.
Many entrepreneurs are
turning to angel or
private investors, with
good reason. There
are more angel investors
than venture
capitalists.
Angels fund more
companies, at an earlier
stage with more money.
While many angels are
conservative in these
uncertain economic
times, they're still out
there and
they're still investing.
These ten tips can help
in the search for angel
investors.
1. Know who you're
looking for.
********************************
The average angel
investor is male, 49
years old, has a college
graduate degree, at
least five years of
investing experience in
private companies, and
invests an average of
$72,000 per investment
according to a survey
our company recently
completed.
2. Look in your own
backyard.
******************************
Most of the investments
made by angels are close
to where they live.
Networking is one of the
most neglected and most
effective ways of
finding angel investors.
Join your chamber of
commerce,
industry groups,
software associations
and other business
groups and then attend
their meetings.
Many areas have angel
networks, find out
what's available in your
area.
4. Polish your
presentation.
*******************************
You only get one shot,
make sure your
presentation, both your
pitch and your business
plan, is the best you
can make it. Have it
critiqued by someone you
can trust to be brutally
honest. Practice,
practice, practice.
5. Be realistic.
******************************
Being unrealistic is the
most critical mistake
entrepreneurs make in
their business plan
according to angel
investors. Back up your
assumptions and
projections with
research. Take a
hard look at whether you
can really achieve the
objectives set by your
business model. Be
flexible in negotiations
and valuation.
6. Be patient.
****************************
It takes time to obtain
financing. The
average time it takes an
angel to close a deal,
from receiving the
business plan to writing
the check is 67 days.
7. Angel investors give
to charity but invest in
businesses.
****************************
Angel money is not free
money, it is not a
grant, and it is not an
entitlement. Angels
invest for a number of
reasons, and one of
those reasons is to
generate a handsome
return on their money,
the average expectation
is a 34% annual return.
8. Get the best
management team.
********************************
The most critical factor
in an angel investor's
decision to invest is
the quality of the
management team.
Make sure your team is
the best you can put
together. If you
don't have CEO
experience, find
someone to join your
team who does.
9. Be passionate
********************************
If you can't convey
enthusiasm and passion
for your company who
can?
10. Persevere
*******************************
Rely on more than one
way of finding
investors, use your
contacts, your network,
your attorney and
accountant. Don't
give up. Don't
take rejection
personally.
Dee Power is co-author
with Brian Hill, of
"Attracting Capital
from Angels: How Their
Money and Their
Experience Can Help You
Build a Successful
Company," 2002 and
"Inside Secrets To
Venture Capital,"
2001. She can be
reached through her
company's web site
http://www.capital-connection.com
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