If you’re trying to start your own company, you’re going to need some support. Sure, you’ll need emotional support, but more importantly, you’ll need financial support. Without it, your business won’t have a foundation on which to grow. You need to find someone who is willing to invest in your company, and your dream, as much as you are. However, angel investors – people willing to invest in small or start-up companies in hopes of getting big returns – aren’t always readily available. It can be difficult to find someone who aligns with your interests and your business idea and wants to help you succeed.
“Angel investments range from $25,000 to $100,000 a company.”
What is an angel investor?
The term “angel investor” has gotten very hot in the past five years or so. The term became well-known after recognizable, successful companies such as Uber, Facebook and WhatsApp all got their start because of angel investors. Normally, their investments are considerable, ranging from $25,000 to $100,000 a company. Though their investments seem large, they usually anticipate that the return will be even bigger. Aside from getting their money back, they also usually seek equitable ownership. However, even though this type of investor seems perfect, things can still go wrong. Luckily, there are a few things to look for in an angel investor to make the search easier for you. Consider these tips.
1. Look for an investor that follows angel guidelines. While they all might call themselves angel investors, not every investor will play by the rules. Make sure the investor you look for does. Angel investing has a strict set of guidelines that all people should follow. If they don’t abide by that criteria, they’re considered “sharks.” They don’t have your best interests in mind – they simply want to take a large portion of the company and earn a serious amount of money in the process. If you’re a little lost by this concept, think of the show “Shark Tank.” The show features a group of talented, experienced investors, all of whom are often looking to better their interests, not yours. While many of the companies they choose to invest in do succeed, they often get a full return on their investment and a hefty paycheck from product sales. Many entrepreneurs who are new to the process will hand over a large part of their company for very little money. However, they might not know they got a bad deal until years later. Do your research on these guidelines so you know what to look for – and who to avoid.
2. Make sure they are experienced. As a fresh-faced entrepreneur, it’s important to look for someone with experience in angel investing. This shouldn’t be the first business they’ve invested in, nor should it be the last. They know the way the investing world works, they have stable finances and they aren’t planning on giving you a bad deal, because they want your support later on. Their experience can also help guide your business in the right direction. Without their sound advice, you might have difficulty navigating the tricky waters of launching a business and you might make a few poor decisions. You want them to be able to look at your business and point out directly where it’s weak and where it needs improvement. Their advice and experience is critical to your success.
3. Look for someone who’s stable. No, not just financially stable. Of course, you want that too, but it’s important that you find an angel investor that’s relaxed. They know the industry of investing and venture capitalism and they aren’t afraid of it. Launching a business is challenging – it will naturally come with its ups and downs. You don’t want an investor that will back out of your business when the going gets a little rough. Instead, you want someone who has experienced these dips before and knows how to calmly handle them. Their relaxed attitude will help make the process a lot easier on you.
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