October 31, 2011
Are Angels the Answer?
Having trouble taking your business to the next level? An angel investor could make all of the difference.
As individuals or in groups, these investors provide funding for your business in exchange for partial ownership or convertible debt. Want to know if an angel investor is right for you?
“Angel investors look to see if the company will return five to seven times their money in seven to 10 years,” Professor Dr. Teresa Nelson, Director of the Entrepreneurship Program at Simmons College School of Management tells PINK.
“Entrepreneurs need to understand what the growth path looks like for their business, how profits will grow and if they will be able to repay the angel investor
or investors in that period of time.”
Nelson suggests following your gut when determining if the angel investor will have a positive influence on your company. “It has to be someone who shares your values, understands what you’re trying to accomplish, and provides feedback without disallowing you to do what you need to grow."
Experts say a successful relationship between entrepreneur and angel investor must involve effective communication (like weekly status updates via phone), a mutually agreed upon level of involvement and an exit strategy.
Angel Capital Association and Dun & Bradstreet offer tips on successful angel investing and ways to get the process started, like how to apply for funding and protect confidentiality. Plus, Golden Seeds is a network of reliable angel investors looking for promising startups.
Bonus PINK Link: If you’re the one investing, check out these do's and don’ts.
By Farren Davis
“Money will take you wherever you wish, but it will not replace you as the driver.” Ayn Rand
Supporting images from FreeDigitalPhotos.net, sscreations, Andy Newson, digitalart .