According to the University of New Hampshire Center for Venture Research, angel investors provided an average investment of $338,400 to over 26,000 start-up small businesses during the first six months of 2011. That’s not chump change when you’re talking about a small business start up, so after hearing that statistic you’re probably wondering what are angel investors and how do I find them?
Angel investors are wealthy private-equity investors (individual or group) usually looking to invest in start-up companies that are considered high-growth prospects. Typically, these investors look to have a synergy with their own business, if not their industry.
Angel investors can be found just about anywhere. For instance, an angel investor, might be a successful businessman, a wealthy doctor, a group of engineers, or a local investment club. Your angel might very well be your rich uncle.
In addition to cold hard cash, a good angel provides valuable introductions and contacts to sources of financing, vendors, and even customers. In this way, angel investors are different than venture capitalists since they lend a helping wing, rather than only providing money.
So how do you find your angel investor? There’s more than one way:
1) Locate an angel network. – Angel networks are local or national groups that meet to discuss new business start-up deals and opportunities. To aid you in your search for an angel, Entrepreneur’s online website lists the top 10 angel investor networks.
2) Colleges and universities. Angels can be found hanging out in academia. Contact your nearest university to see if they have an entrepreneurial program. If they do, speak to the person that heads the program, who can put you in touch with one or more angel investors.
3) Local chamber of commerce. Many angel investor groups are registered with their local chamber of commerce. Call your local chamber of commerce and ask if it sponsors a venture capital or angel investor group.
4) Small business service professionals. Accountants and lawyers work with entrepreneurs and small businesses all the time. There’s a good chance they will be in the know as to how to find angel investor money for your start up.
Keep in mind that finding an angel investor group can be a tedious process. However, the advantages of obtaining angel capital can well outweigh the efforts and time commitment during the angel investor search process. Besides the actual financial benefit, one of the biggest advantages of using an angel investor is the advisory role they play in your company — guiding new business owners during the early — and often challenging — stages of entrepreneurship.