What Are Angel Investors?

Angel investors are usually people who have extensive experience in a specific industry and are willing to invest money in projects that banks or venture capitalist might overlook. They are known for taking risks based on their own experience in a particular area, something that an outsider might not fully comprehend.

Usually an investment like this will be up to $100,000 and provided by a single person, though it’s not unheard of for angel investors to group together and spread out risk. Frequently, they are looking at companies that are just getting started that have a particular innovation or market-ready product that they need just a little more capital to get going.

A difference between them and venture capitalists is that they are generally not as focused on an exit strategy. If your concern is keeping your company afloat rather than, for example, making a mint while it’s sold off in pieces, then you’re likely going to want to search for an angel investor.

Pros and Cons of Angel Investors

Obviously, an angel investor is going to want to exercise some control over the business that they’ve invested in, but it’s generally gentler control than most venture capitalists might exercise. Angel investors frequenntly see their role as advisory with a goal of focusing the company’s efforts to bring their product or service to market.

They will also want to be part of the decision making team and will expect to be kept up to date on the business’ financials, marketing strategies, etc. What you’re getting with this investment might be a small amount of capital, but it comes with priceless experience.

Keep in mind that this sort of investor usually doesn’t step outside of their own industry. The point is to use their knowledge to identify emerging trends and companies, so make sure that you’re pitching your project to the right people.

Is This the Right Solution for Your Business?

That’s a question you really need to consider carefully before going in search of an angel investor.

First of all, are you the sort of business person who is prepared to share the running of your business with an outsider? That’s a near certainty with this type of investor. It’s part of the benefit, really. However, giving somebody else control of your company might be a little hard to cope with.

Is the amount of money that an angel investor likely to offer enough for what you want to achieve? Sometimes it’s possible to need more money than this sort of investor can provide and you need to consider that.

You also need to look at whether or not some other form of capital injection might be more appropriate. Remember, angel investors are looking for new and innovative products that will appeal to a wide market in a particular industry. Does your product fit this description?

Can your business really generate demand to ultimately become attractive to other forms of investment so that you can completely pay out your investors or are you likely to struggle to reach that point?

Don’t spend valuable resources looking for an investor until you can answer those questions with data.

How to Obtain Angel Investor Funding

There are two ways to go about obtaining funding from angel investors.

First, talk to other professionals in your industry. Angel investors are always seeking new opportunities, so they will make sure people know who they are and how to reach them.

If you can, get an introduction from a mutual friend and spend some time with them. Talk about what you do. Of course you’re going to have to do a little selling here – both of you and your product – if you want to succeed.

The other way to obtain angel investor funding is through your business adviser. A good business adviser is an invaluable asset to your business because of their connections and experience, so secure one now to open up resources that you’d otherwise never heard of.

Your business adviser will know which angel investor is right for your business and can get things rolling for you. If you don’t already have a business adviser, then take a look at EM Advisory Corp. Experience matters, which is why EM Advisory Corp has made it the cornerstone of their business.