As an entrepreneur, your mind is always buzzing with new ideas, but when it’s time to implement them, you need new investment. How to find the perfect business angel that will help you develop your business? Here are a few tips to help you along the way.
There are different types of business angels:
1. Friends & Family – aka “Love Money”
They know whether you are backable or not. Yet, it is dangerous to mix personal and professional relationships. As you know, only 1 out of 10 start-ups is successful, so your relatives should be made aware that investing in these projects is highly risky.
2. Individual Angel Investors
This is the hardest way to find financing because they usually want to stay anonymous and they don’t know you at all. This is why you should find an investor who is interested in the business sector in which you operate, as s/he can understand the business model and the value your project can add. To find a business angel according to your sector, Angel List is a good resource to find the adequate investor for your project.
3. Angel Investor Networks
These networks enable the individual investors to stay anonymous, so they will be more eager to invest. Besides, as these networks constitute a team, the investment will be bigger and better managed.
4. Fundraising Advisors
It is usually the most expensive way to get funds because the investors take between 5 and 7% of success fee, plus the same amount in dollars in warrants to buy into the deal and often there is a monthly retainer to cover their costs. So, you should make sure they will understand your concept too.
Also, you should know that investors are usually more interested in people than in their business ideas (source?). You thus need to create a strong relationship based on trust. They need to know you before you ask them to invest in your project.
They also expect you to understand their motivation and respect the time they dedicate to you. You should show integrity rather than sales techniques. As they like to see the results of their investments, you might want to look for local opportunities.
Last piece of advice: go to tons of investment-seeker events and network a lot!