Maybe you’re a person with a great idea and just need the money to get it off the ground. Maybe you’re a small business who wants to grow to a larger business but lack the capital to do it.
You could contact your local bank for funding but often that will fall short for a few reasons:
First, you need more capital than they’re willing to give you. A small business loan will be tied to your cash flow or other metric that defines you as a small business. This may not be adequate for the size of the investment needed to take your business to the next level.
Second, you need more than money. The money is an essential but as somebody who has either never owned a business or has on a small scale, you may lack the knowledge, the contacts, and the resources to make a large scale expansion. A bank will only give you the money. They won’t provide the knowledge.
What you may need is an angel investor. An angel investor is an individual who looks for companies or ideas with a large amount of growth potential. Once these companies are identified by the angel investor, a larger scale investment is made in to the company in exchange for acquiring a stake. The stake is often large, 10% to 50% or more.
In addition to capital infusion, the angel investor often has access to professionals who can further develop the product, market the business, or provide manufacturing and distribution facilities.
You might be thinking that in your circle of contacts, you don’t have many angel investors stored in your cell phone. Here are eight places to start your search if you believe that an angel investor is right for your business.
1.) Call your trade organization. If you are a member of a trade organization as part of your business, call the president of the group. They often have contacts with other companies who have accessed money like this.
2.) Your Attorney. Your attorney most likely knows or has access to others who would know about high net worth investors such as this. Your job may not require attorneys regularly but angel investors deal with attorneys on a daily basis.
3.) Your accountant. About as often as attorneys, angel investors use accountants so yours probably knows who to ask if they don’t know angel investors on their own.
4.) A banker. Ask the president of your local bank.
5.) Local Chamber of Commerce. Some chambers of commerce host venture capitalist groups with a mission of connecting people like you with angel investors.
6.) Local Businesses. If you have a publically traded business in your community, look in the IPO for the principal investors. Contact one of those as a place to start.
7.) Regional economic development group. Call a regional or state office and ask if they know of an angel investors group.
Keep in mind that angel investors often come at a high cost. Make sure to research all available options before committing to venture capital related services.