How To Articles

How to Find an Angel Investor

Angel investors are among the earliest sources of funding for would-be entrepreneurs and owners of fledgling startups. Collectively they invest billions of dollars in new ventures each year and are far more inclined to invest in early-stage startups than venture capitalists, banks or any other form of outside funding. Angels are private investors, typically in their sixties, who are more often than not successful entrepreneurs themselves.

There are many different ways to go about searching for an angel to fund your startup. Here are some examples.

1. Ask family or friends for funding
   
   For some people, turning to loved ones as a source of startup funding has worked out great. Family and friends are often the first to spout their enthusiasm over your new venture. They believe in you, and they're willing to open their pocketbooks to prove it. On top of that, getting funding from those closest to you is a much quicker and easier route than the alternatives. The problem? You don't want to be sitting around the dinner table years from now still hearing about how you carelessly squandered away your brother?s hard-earned cash. For loved ones, the decision to invest ends up being an entirely emotional decision rather than what it should be, a sound business decision.
   
   Unless you have no other options, avoid seeking funding from family and friends. If you decide to do it, treat them like business partners. Decide right off the bat whether the money will be a loan or an equity stake. Take care of all the details and draft up an agreement. Friends and family will also feel better about their investment if you're willing to invest your own savings as well.


2. Talk to colleagues and business associates
   
   The nice thing about seeking funding from colleagues and business associates is that they already know you, and they know you from a business perspective. They know how driven you are and what you?re capable of. They also know your strengths and weaknesses, and what it?s like to work with you.
   
   In the end if they decide against becoming your angel investor, then you can still ask them for advice or referrals. They'll be able to point you in the right direction.


3. Research angel networks on the Internet
   
   There are organizations out there, like the Angel Capital Association, that provide listings of angel investors on their websites. These networks and organizations allow entrepreneurs to quickly and easily search for potential investors. Finding an angel willing to invest through an Internet search is much more difficult, however, because angles prefer to be acquainted with those they invest money in. That?s not to say that you couldn?t get to know each other before a deal is made though, so still give it a shot.


4. Network
   
   Tap in to networking organizations like trade groups or chambers of commerce. Attend regular meetings and become acquainted with their members. People who are well-connected within your industry or geographic area might be able to refer you to an angel if not become your angel themselves.


5. Look for the right angel investor
   
   There are many different kinds of angels out there in many different locations. Approach those who are in your industry or are at least interested in your industry. For example, you don't want to pitch an angel whose life?s work is in technology if you're looking to start a small chain of bakeries.
   
   You also need to be mindful of where your angel is located. They often want to be actively involved in your business, so look for angels that are relatively close to you, geographically speaking.