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What our members have to say...
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"We found the AIN event to be a great opportunity to present our company profile in a 4 minute pitch format. The team provided invaluable pre-pitching coaching to assist us in preparing for the night. We would certainly participate in future events"
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Laura Issa - www.nsinnovations.com.au |
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Tips for what to look for in a private angel investor
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When entrepreneurs are looking for support to start a fledgling business idea, they may look to private angel investors to supply more than just seed funding. An angel investor, who is usually a successful businessperson, can provide many valuable benefits to a new business owner. While angel investors generally stay silently in the background, they can become mentors who give guidance and financial wisdom that can help even a novice business owner well after the start-up phase.
Finding the right private angel investor takes time and patience, much like the skills it takes to start a new company in the first place. This is a search process that should not be taken lightly, because not just any angel investor will do, even in our present economic conditions. Collaborating with an angel investor is not just about the financial support; it is a working relationship that can last for years. Choose wisely and your business will have every advantage of being prosperous. Read these tips on what to look for in a private angel investor, to find success in this venture.
Tip 1: Choose an Angel Investor Who Understands Your Market
One of the keys to finding the best angel investor is to seek out someone within your current market niche. No one can understand the challenges of your market better than a seasoned businessperson who has worked in this industry for a few years. This will become vitally important as you seek seed capital to pay for business needs, because this type of angel investor will understand why this is necessary for success in growing your business. Without this insight, you may find yourself having to fight longer battles in getting the support you need from angel investors who do not completely understand your industry as a whole.
Tip 2: Consider the Private Angel Investor’s Cash Terms
When interviewing angel investors, it is critical to understand the actual terms of the agreement with anyone who will be providing financial support. Will the investor be able to come up with the amounts that you actually need to pay for equipment, real estate or staffing costs? Is the person expecting a certain share of equity in your company that you can live with? How quickly can you access money when you need it from this angel investor, and will there be any “strings” attached that will make it difficult for you to work with this person? These are the questions you need to ask now so that you have a reasonable amount of comfort in working with any angel investor from the get-go.
Tip 3: Look for a Long-Term Investment in Your Business
The best private angel investors understand that a small business may need support for the long haul. Angel investors who expect a quick return on investment in this economy are not the type who will understand when the business runs into challenges. Seek out angel investors who have a good understanding of your particular business market, have successfully built similar businesses from the ground up, and who are willing to be involved for the long term. These folks will become your biggest mentors and support you even through the tough times, if you can prove that you will work hard to create a profit for the business over a reasonable amount of time.
Tip 4: Select Angel Investors Who Match Your Values
One critical area that many entrepreneurs forget to think about when seeking out private angel investors is matching personal and professional values. It is never a good idea to compromise your values as a business owner in exchange for financial support. Examples of mismatched values can include poor work ethics, conflicting religious or political affiliations, negative reputations in the industry or community, or personal beliefs and behaviors that become problematic over time. If there are any red flags as to the character or behavior of a potential angel investor, move on to someone else who more closely matches your values and belief system.
Tip 5: Angel Investors Who Respect You as the Owner
For a new business owner, the lines between being the owner of the company and becoming dependent on the support and advice of an angel investor can become blurred. When this happens, even well-meaning private investors who are supposed to remain in the background can start to take over the daily operations of a business. This is definitely a situation you do not want to get into with an angel investor. You must remember that it is your business, and you should only work with investors who will respect your authority, time, and methods for running your venture. As you are talking with potential angel investors, keep this in mind and ask questions about how the investor plans to be involved in your business as a whole.
As a small business owner, there are many great reasons for seeking out the support and guidance of angel investors. Just remember to screen carefully, follow your instincts, and gather information you need to find success with a private angel investor relationship.
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