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Can someone explain the process of finding an angel investor? Is it easier to get funds from the stock market? - Answers - 11-18-2012 01:03 PM
Is it easier to just put out the business in the stock market?
- angelinvestor - 11-18-2012 01:11 PM
Getting investment money to help start a new venture is far from easy. Getting it from an angel investor is extremely difficult (fewer than 4% of all companies that seek it manage to get it); getting it from a venture capital fund is nearly impossible (fewer than 0.4% of all companies that seek it manage to get it); and getting it from "the stock market" is completely out of the question (the requirements to be listed on NASDAQ, for example, are that you already have millions of dollars in revenue and hundreds of existing investors.)
Angel investors have many, many more opportunities in which to invest than they can possibly handle (there are over 600,000 new companies started annually in the US, and the average angel investor makes only one new investment a year.) As such, they look for the companies most likely to be able to grow very big, very quickly, which will enable them to get returns of 10, 20 or even 30 times the money they invest. This sounds crazy, but because starting up new businesses is so risky, most companies in which angels invest--no matter how carefully they pick---end up going under. Therefore, an angel needs to be able to get outsized returns from the few winners, to make up the losses from the losers.
By far the best way to find an angel investor is by talking to everyone you know, especially your lawyer, accountant or banker. They may be able to introduce you to people who they know make these kinds of investments. You should also use your online social networks to reach out to people who you think might be possible investors. These sites, particularly LinkedIn, are a good way to get a warm introduction to an investor from someone who knows both of you.
Some angels, particularly some of the more serious ones, form groups which get together each month to hear 'pitches' from companies looking for funding. The group members will then pool their money (typically $10,000 to $100,000 from each of several members) and invest as a group into a company. You can find the angel groups nearest you using the free search engine from Angelsoft (see link below) which operates the network that most of them use to process funding applications.
There are about a dozen books on angel fundraising for entrepreneurs, of highly varying quality, and many of them are out of date. The best one is "The Definitive Guide to Raising Money from Angels" by Bill Payne, and is available as a download from his website (see link below) for $37. That's probably a great place to start, to at least give you an overview of the process.
Good luck with your venture!
- angelinvestor - 11-18-2012 01:11 PM
email me your business plan and proforma
relaxin70@yahoo.com