May 22, 2011
When you are looking for angel investors who will fund your small business, it would be smart to look at things from the viewpoint of that particular investor. If you were in the shoes of an angel investor, what things would make you want to give money to a new company?
Generally, the two main things would be markets and management. Angel investors want to know that you are promoting your product or service to a market that is big enough to get a decent amount of income. True income projections for a small company that is trying to get an angel investor can range anywhere from several hundred thousand dollars a year to several million dollars per year, within the first five years. This should be compared to the normal income of the majority of venture capitalists. A lot of them are looking for businesses with fifty to one hundred million in revenue within the first five years.
Not only do angel investors need an adequate amount of income, but they also want to invest in businesses that have reputable and proficient management teams. It is crucial that you present yourself as being skillful and successful in terms of your past business ventures.
Also, angel investors must have confidence in the other operating staff of your business.
Angel investors also want to invest in businesses that will have the ability to create barriers to enter their industry.
A new company will get more attention if there are not that many new competitors entering that particular market.
The lower the competition is, the higher the revenue and profits.
Another factor that angel investors will utilize to narrow down prospective start-ups is location. It does seem more logical to invest in businesses that are within your same geographical location. This will give an investor the ability to interact more with the business.
In addition, the investor will be nearby to give advice and help the business to grow. It has been proven that about seventy percent of angel investors live within fifty miles of their investments.
The most important thing is that angel investors want to find an acquisition or a public offering.
All in all, it is these types of things that will show a return on the initial investment. Most importantly, angel investors really want to know about the liquidity potential of small businesses.
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