Angels with Checkbooks? Perhaps

Note: Larry on Business now offers shorter blogs (easier to read) more frequently (Tuesdays, Thursdays, & Saturdays).
Today we continue our exploration of funding sources for your business. Please share your experiences.
Definition of a typical angel investor: (1) a successful entrepreneur, (2) that sold their business, (3) with money to invest, that (4) does not want day-to-day operational responsibilities.
Angel investors provide funding to ventures they feel will succeed and give them a high return on their initial investment. Unlike Venture Capital groups angels usually do not want to own or operate the company. They may serve as advisors using their own entrepreneurial experience to guide business owners. You can learn more about angel investors through a series of articles in Inc. Magazine, through Gust, and angel networks.
How to Find Angel Investors

• Angel investors tend to network together. Google “angel investment network”. You will find geographic networks “newenglandinvestmentnetwork.com”, special groups “minorityangelinvestornetwork.com”, or industry “Startup Nation’s Food Section”
  
• Talk to your local Small Business Development Center (SBDC), SCORE,  Chamber of Commerce,  or Center for Entrepreneurship at your local college or university
  
• Google “angel investors in (your state)”

Convincing Angels to Invest in You
Typically, you will present your business idea  to a group of investors (remember they like to network). Watch the television program Shark Tank to see real presentations (though they like to be slightly more contentious for the ratings). Most angel groups schedule a certain day each month, quarter, or year (depending on the size) to review presentations. You submit a written proposal for them to review prior to the meeting. You will be given 5-10 minutes to make your pitch. They will interrupt you with questions as they occur to them.
The Tri-State Private Investors Network provides 10 Tips to Appeal to Angel Investors. In addition, you can also find great tips on YouTube for presenting to angels. Carolyn Brown quotes Mike Levinson as he outlines four questions you must answer in How to Pitch to Angel Investors:

1. Is the business idea simple enough for me to understand and buy into?
2. Does it solve a problem or meet a need?
3. Is it a big enough market and customer base for the idea?
4. Does the entrepreneur have the right people on the team to pull it off.

You can get the angel’s money if you answer those questions better than the other entrepreneurs.  Good luck. I hope you get what you want.
Join me Thursday when I review the pros and cons of Venture Capital investors.

Finding Funding & Financing

Please share funding sources that helped your business
Finding funding remains one of the prime needs for many business owners. News reports over the last few years describe the problems American business owners face obtaining credit or funding. A lot of credit disappeared when CIT Group a commercial lender entered bankruptcy. CIT customers included “a wide swath of the nation’s small and midsize businesses who rely on the company or financing”.
The Small Business Administration provides loans to small-business owners. They offer a variety of programs depending on the needs and qualifications of the business. The SBA does not loan the money themselves. They guarantees loans on behalf of qualifying small-business owners. They require a lot of paperwork.
Business lending continues even though less money and credit remains available to business owners. Interestingly, small or regional banks and credit unions appear to possess money to lend. Check your local or regional banks. However, upcoming problems in the commercial real estate loans may create a new tsunami of problems for regional banks.
Angel Investors usually consist of former entrepreneurs who made a lot of money and now want to invest in other startups or small businesses. Unlike Venture Capital investors, Angel Investors seldom want to own or manage the business. They seek a turnover and high return on investment. You can find angel partners by using Gust.com.
Scalable businesses currently receive 98% of the funding currently awarded to business startups and small-businesses because they offer extremely fast growth and return on investment. I discussed that in an earlier post called Can Your Business Idea Succeed. You can also discover more about funding by reading Steve Blank, author of The Four Steps to the Epiphany, offers amazing tools, books, and other resources to startups.
Our next blog will explore angel investors more deeply.
Help others by sharing funding sources that helped your business