June 20, 2011
If you are seeking funding to startup your business, then you should look for angel investors to help you. Angel investors are willing to help give the needed capital for your business provided that it possesses the factors that the investor is looking for. So, what are these factors?
There are two major factors that will get the approval of an angel investor, these are market and management. Angel investors prefer that your business operates in a large market because this equates to more revenue. Angel investors usually look for realistic revenue projection ranging from hundred thousand dollars to millions of dollars for the next 5 years. This is more realistic compared to what venture capitalist will expect which is $50-$100 million in revenue for the next 5 years.
Aside from market revenue, angel investors also seek credible and competent management from you. You must show your investor that you are competent in carrying out a new business venture and in producing the revenue they want. And since you won’t be running the business alone, angel investors also need to see that the other personnel in your business are competent as well.
Furthermore, angel investors want your company to be able to construct a barrier to entry in your chosen industry. If the entry of new competitors is low, this will mean higher revenue and profit for your business which makes it a more attractive investment for angel investors.
Another factor that angel investors look into is the location of your business. If the location is nearby, it is a much better investment for them as they can easily interact with you and keep a close watch on their investment. Moreover, investors also want to make sure their money is safe and growing. Thus, they will offer you some assistance and guidance in helping the company to grow further. Studies show that 70% of angel investments are located 50 miles of the angel investor’s location.
Additionally, angel investors also look for your businesses liquidity event, may it be an acquisition or public offering. These events provide a quick return to initial investment that is why angel investors are concerned with the liquidity potential of your business.
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