These individuals are looking for a higher rate of return than would be given by more traditional investments (typically 25 percent or more).
Angel investors are perceived of as "filling the gap" between the financing provided by family and friends and venture capitalists.
Individual angel investors typically invest up to $150,000, but it's becoming increasingly common for angels to operate as part of an angel syndicate (a group of angel investors), which raises their potential investment level accordingly.
Usually, an angel investor is looking for a personal opportunity as well as an investment.
Because he or she is interested in adding value to the company, it's important for any business person thinking of accepting investment from an angel investor to be very clear about what the angel investor is bringing to the deal besides money, and to develop an understanding of what the angel investor would be like to work with.
4 Tips for Finding an Angel Investor for Your Business Is there a small business that hasn't needed more capital at some stage of development? And is there a small business owner who hasn't thought of an angel investor as an ideal source of the capital he or she needs? But finding an angel investor isn't like finding a clam on the beach; the search is more similar to finding the pearl.
Here are some tips for finding an angel investor.
Know who you're looking for.
Your chances of connecting with the angel investor you need, will be much better if you keep this profile of the "typical" angel investor in mind.
Here is a typical angel investor's profile: · has an income that exceeds $100,000 · is 40 to 60 years old · has a net worth in excess of $1,000,000 · has previous successful entrepreneurial experience · expects to hold on the investment for up to five to seven years (although some angels wish to "cash out" after only a few years) · enjoys advising the entrepreneur and likes to be part of the action · invests up to $150,000 but may participate in a syndicate of other angel investors bringing the total investment to multiples of individual investments Angels look for companies with growth and export potential says Allan Riding, an expert on angel investing and professor at Carleton University.
Look close to home.
Because so many angel investors like to play an active role in the business they invest in, they prefer to invest in businesses that are close to home.
The angel wants to be nearby so they can drive over to talk to the principals.
Network, network, network.
In most cases, you need to be referred to an angel investor.
They're not hanging out on the street waiting to talk to whoever comes by.
So to find an angel investor you need to get to know the right person (the one who can refer you to the angel investor you're looking for), which means immersing yourself in your local business and social community.
Focus on business owners - as these are the people who might be or become angel investors themselves or know an angel investor.
Join business and trade organizations and regularly attend the meetings.
Joining civic and community organizations are also great for networking.
Attend trade fairs and events.
Get your face and your name out there and meet as many people as possible.
Realize that many angels don't fly solo.
While there are some angel investors who invest entirely on their own, many operate as part of an informal network or syndicate where they can pool their resources and share the risks.