How to Find an Angel Investor
Angel networks were formed to benefit both the entrepreneur seeking capital and the wealthy individuals interested in making investments in early stage companies. The networks can be easily found by entrepreneurs. Article continues below.
They usually have a mailing address, a telephone number and contact name, and a website describing the groupís activities. These groups in effect allow an entrepreneur to meet dozens of angel investors at once. Membership in some of the groups can top 100 individuals.
Many networks operate this way: the entrepreneur sends an executive summary in through the mail or by online submission. The network has a committee that screens the submissions and invites the most promising ones to either submit a complete business plan for review or make an in-person presentation to the group at a luncheon or dinner meeting, followed by a question and answer session. A committee may be formed to perform the in-depth due diligence on the company and make a yes or no recommendation to the membership as a whole, who then vote on making the investment.
The process can work efficiently for the entrepreneur. The angel network often tutors the entrepreneurs on how to make an effective presentation, and prepares them for the tough questions they will be asked. Instead of trying to meet angels on an individual basis, and get each one to agree to invest, the entrepreneur may be able to obtain all the start-up capital he or she needs from one source, the Angel Network.
The major drawback to angel networks is simply one of numbers: because the Network is visible in the local community, it is contacted by hundreds of entrepreneurs annually. Your deal is competing with all these others. And sometimes, the network is not as open as it appears, or says it is. Some do not review any companies that were not sponsored into the group by one of the angel members.