Angel investors are people who put money into companies, both small and large. They can be both established private equity investors or angels who have become socially conscious and want to use their financial resources to create opportunities for the underprivileged. Their investment activities can range from funding for new start-ups to buying up businesses that have failed in the past.
The first thing to consider is that angel investors can be very difficult to deal with. Although the first time you meet one you may feel comfortable and trust that they are not going to run off with your hard earned cash, you should be wary. Most of the time they will be very upfront with you about their motives and methods, and it is possible that they will try to do more than what they say they will.
One of the most important things you need to do when dealing with these investors is to be honest and direct. Although you may want to keep it professional and business like, you need to remember that a person who has invested in a business is going to be looking at all the aspects of the business, including how the marketing is working and whether or not the operation is running smoothly. If the person does not see a full business plan or management system in place, they will not be investing money and will continue to look elsewhere.
Once you have arranged the meeting to discuss the business with the investors, the next step is to explain the business in detail. This is your chance to explain how the business will benefit the investor and how they can get involved. You should be able to provide all the details of the business, including how much money you need to start up, the technical aspects, management systems, and how the business will make money.
When talking to investors, make sure you also ask about funding. Many times, they are looking for an asset with a great return on investment, such as a newly constructed building or equipment. They may also offer financing options.
Investors should have strong relationships with other professionals who have access to and knowledge of the same industry. For example, if they are looking for a real estate investment, they will seek advice from a developer or an architect. Therefore, it is important to keep professional relationships with those you work with on a daily basis.
It is very important to pay careful attention to the way you write the business proposal. You should avoid using terms like ‘for sale’ and instead always tell them that there is an opportunity to buy the business. This will not only increase the chances of getting their investment, but will also increase the chances of them being interested in buying.
Once you have submitted the proposal, make sure you send them a letter of commitment from the investors and a letter of intent from the business owner to sell the business. This is very important, as it will show them you are serious about investing. They will also be interested in knowing that you have the capital you need to succeed.
In addition to providing details of the business, you should be honest about what it is going to take to run the business. You need to show them that it is possible to raise the funds, that you are prepared to do the job, and that you have realistic expectations about how long it will take to get the business up and running. Do not set yourself up to fail by expecting too much too soon, as this will only result in the business going out of business.
A second step is to contact the owner of a new business you are thinking of investing in. Do not offer any guarantees about what the business will turn out to be like, as it will remain in the ownership of the owner until it is sold. It will also not be included in any future reports on your company, so you need to remain calm and focused and only present information about the business if there is any sense that it is a good investment.
In order to get better results with angel investors, you should also make use of other sources of advice. These include lawyers, accountants, and tax experts. You can also seek advice from people who have started businesses before, and who have been successful and find out whether there are any business success stories that they can share with you.
If you do not get the first few investments that you try, however, do not despair, because angel investors are not all alike. and some investors will give you a business if they believe in it, while others will not. depending on the merits of the business, the owners, how good the business opportunity is, and the amount of risk involved.