What Angel Investors REALLY Want to See

by Angel Investor Funding

In a post for Angel Investor Funding, Ellen Sandles, President of the Tri-State Private Investors Network runs down several tips to attract angel investments to your burgeoning business.

“Private equity is a class of investment, and most early stage entrepreneurs are better suited for investment from private investors (“angels”), then from professional venture capital funding,” she writes.

Considering 250,000 or so angels in this country invest about $30 billion annually, most of it in growth capital for start-up and early stage ventures, Sandles says, the early-stage entrepreneur thus has an increased probability from this type of investment over VC firms. (See Venture Capital vs. Angel Investment)

Sandles lists off several ways to attract that kind of money for your startup. She says, you should:

  • Accept the fact that having “a good idea” is often not enough to raise capital from private investors, and you should do your homework to provide “proof of concept” for your venture. “Angels are impressed when you have lined up potential customers who are willing to test or sample your product and also commit to purchase it, should it solve their problem,” she writes.
  • Recognize that angels are “value-added investors.” Sandles says that Angels usually bring with them added value, including prior industry experience, valuable knowledge about business itself, their ability to mentor, creative ideas and contacts for your business.
  • Invest your own money in your venture. “Entrepreneurs who expect investors to risk their money in their venture, should also place at least 20% of their own net worth in their business.,” Sandles says as a general rule.

But that’s not all. For more tips on attracting angel investments, read Sandles full post here.