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April 11, 2011

Attracting Angel Investors

If you are looking for investors for your small business, and you are hoping to attract an angel investor, it is important to think from the perspective of the potential investor. With that being said, if you are an angel investor what elements or issues would impact your decision making as to whether or not you invested in a startup company?

There are two main factors that angel investor use as a rule of thumb, management and marketing. What angel investors are looking to see is that your market is large enough so that you are able to hit target sales levels to generate appropriate revenue. It is important to keep in mind that realistic revenue projections for a small business should be anywhere from a four thousand dollars each year all the way to 4 or 5 million dollars each year, in five years time. (Compared to the revenue that venture capitalist are looking for which is in the 50 million to 100 million dollars in five years time.)

Click here to get your angel investors funding formula! <==== Aside from the appropriate level of revenue, angel investors also want to know that a company has capable and credible management. When you approach angel investors it is very important that you portray a successful and experienced image based on previous ventures you have had. It is not you alone that they judge, they want to see that your team is capable and credible as well. The other element that is important to angel investors is that they want to see the company they are considering investing in is able to put up barriers to prevent others from entering the industry. A new business will be able to attract more angel investors if they can show that there is relatively low competition in the industry. In this regard, lower competition means higher profits due to more revenue. Location is also a determining factor for angel investors. It only seems logical to make an investment in a company that is close enough for you to monitor. This will allow for more interaction between the investor and the business owner. This is key due to the fact that the investor is probably able to offer guidance or assistance to the entrepreneur as the company grows. Research has shown that more than 70% of all angel investing is done within a 50 mile radius of the angel investor. Click here to get your angel investors funding formula! <==== The possibility of a liquidity event is also crucial to angel investors, this means a public offering or an acquisition. These types of events are what will give the angel investor a return on their investment. The one thing that all angel investors are most concerned about is the possibility of future liquidity of small companies.


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