How to Find and Invest Private Equity

Gerald A. Benjamin Joel Margulis

 In their book, “Angel Financing: How to Find and Invest Private Equity”, Benjamin and Margulis pens the gripping story of Broadway impresario Florenz Ziegfeld and his investor Jim Donahue

Jim Donahue lost his money in the stock market crash of 1929, following which he committed suicide. Following Donahue’s death, a determined Ziegfield wrote to his widow asking for the $20,000 promised to him by Donahue before he died. Within 3 days, Ziegfield had managed to retrieve the amount. In their book, Benjamin and Margulis use this interesting episode to exemplify the level and extent of determination required to raise capital.

With plenty of practical advice on running businesses, the authors point out the 3 main causes behind dwindling capital in the market. According to Benjamin and Margulis, venture funds are bating due to an increase in demand of start-ups for large quantities of financial back-up, rise in competition for capital among start-ups, and diminishing finance and traditional capital sources. As a consequence, an increasing number of young companies are seeking financing from angel investors. According to Government data, 61% of new entrepreneurs are welcoming this alternative method of raising capital.

‘Angel Financing’ is an essential study for entrepreneurs.

Providing valuable insights coupled with practical business strategies, the book shows how to judge angels. According to the authors, large debts are consequences of large incomes. Angel investors provide private equity towards high-risk ventures, which sets them apart from merely affluent individuals. Because of discretionary income of angels, start-ups should target those who show interest in the relevant market, and a willingness to achieve success.

Angels surface infrequently to close deals. This makes it difficult for start-ups to network with them. According to data published by Forbes, there are only 300,000 private investors in America actively providing angel funding to high-risk deals. An ideal angel is one that cherishes an entrepreneur’s privacy. In chapter 3 of the book, Benjamin and Margulis outline ways to locate angels. They have published Cass Apple’s, former president of Sierra Designs and founder of Digital Records Corporation, views on angel investors

‘Angel Investing’ speaks of Apple’s willingness to take up angel investing instead of venture capitalism. Apple was impressed by the quality of commitment of angels in financing large stakes in exchange for participation in the company’s management. According to Apple, angels were surprisingly accommodating, expressing far lesser need for control of a company than venture capitalists.

In an interview to San Francisco Business Times, Apple opines that, while venture firms involve themselves with young, but established companies investing more than needed quantities of finance, dealing with angels is much quicker and allows companies to tailor their deal to the private investor. Apple also expressed the value of acquiring funding from someone with experience and intelligence. Such an angel, Apple concluded, could deliver a successful business strategy for market launch of the company’s product.

Most experienced entrepreneurs agree on the worth of private investors and that assessing angels is beneficial to a business. New entrepreneurs however, face difficulties in locating, attracting and establishing relationships with angels. Start-up owners may spend many hours and prepare over hundred presentations before finding an angel. To combat this problem, Benjamin and Margulis explain in chapter 9 of the book, how a database of angels should be built. The authors outline angel search strategies capable of delivering fruitful results.  Benjamin and Margulis show business novices the process of identification of angels, establishing contacts, and building and sustaining relationships with private investors throughout funding procedures

Finding private equity is a challenge for entrepreneurs.  

Through their book, “Angel Financing: How to Find and Invest Private Equity”, Benjamin and Margulis reveal strategies to make angel search an efficient and successful process for businesses.