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You鈥檝e just started a business. You鈥檝e got the idea, you鈥檝e got the product, you鈥檝e possibly got a storefront. You鈥檝e also built up a community of friends and family members who are excited to support you. Now what? Where do you go from here?
There are many so, once your business is in place and you鈥檝e started growing, angel investing could be the next step to get the additional financing your company needs to succeed.
Angel investing is when individual investors assess your business鈥檚 prospects and buy a piece of your company, says Allyson Redpath, founder of investment organization , an angel investing company for women, by women.
Unlike stock market investing, angel investing is private, with specific net worth and income requirements that allow you and your investors to feel secure in the partnership. With the help of angel investing, you can receive the funding and support you need to grow and eventually move on to venture capital.
What angel investors look for
Angel investors fund early-stage businesses in almost any industry. The primary thing they鈥檒l look for in your company is growth.
鈥淚f you think this company can be $100 million in revenue in a fairly short timeframe, then it has potential,鈥� Redpath says. 鈥淚f it鈥檚 a slower, longer-term thing, then it鈥檚 less likely.鈥�
Your company is more likely to get angel investors if it has a full team, the main functions in place, evidence of growth, and evidence that a product is doing well.
Angel investing vs. loans
Redpath recommends that you consider loans before angel investing if your company has good growth prospects and you don鈥檛 want to sell a piece of it.鈥淪ome companies I talk to automatically think, 鈥榦h, we need investors, we need venture capital,鈥� because it鈥檚 so well-known, and sometimes companies don鈥檛 realize that they can get bank loans,鈥� Redpath says.
While bank loans are less expensive than angel investing, angel investing is more accessible if you鈥檙e a beginning business owner, says Liz Doerr, co-founder of , a company that helps entrepreneurs launch, grow, and monetize businesses.
Many venture capitalists and angel investors don鈥檛 look at cashflow as the main thing they base their decision on, Doerr says.
Generally, the entrepreneurs getting angel investments are not cashflow positive because they鈥檙e still growing and putting a lot of money into their company, Redpath says.
鈥淭hey can鈥檛 get bank loans for the most part,鈥� she says.
How to get an angel investor
First, assess your business to see if it is 鈥渧enture backable鈥�, Redpath says.
Second, have your pitch deck 鈥� the way you present your company to investors 鈥� down.
鈥淭he pitch deck for me is really a way of communicating your story in a concise way that is compelling, and you really need to have that before you start talking to anyone because that鈥檚 the first thing that they鈥檙e going to want to know,鈥� Redpath says.
Third, find the right investors. There are many groups out there, but it鈥檚 important to find investors suited to your business.
鈥淪ome companies, they just want to talk to anybody that鈥檚 an investor, but that actually is not a good use of time,鈥� Redpath says. 鈥淚t takes a lot of time to raise money, so don鈥檛 do it unless you absolutely have to, and you have no other options 鈥� and be strategic about it.鈥�
For more resources designed to meet the unique needs of women in business, including an array of financial products exclusively for entrepreneurial women, visit .
The opinions and information provided by the guests in this article do not constitute advice from, or the opinion of, Sonabank.
