Angel investors are an important source of capital, whether you need startup capital or second stage financing for more established businesses. High net worth individuals, angel investors typically invest in high growth fields.
Compared to a venture capitalist, an angel investor generally want less control of your company and a even a slower return on investment. They have a more patient exit strategy and often driven by factors other than the bottom line (e.g. foster economic growth in the community). But don’t think though that they are some kind of a saint who is willing to give away money to see you succeed. They’ll give money because they want to make more money — from you!
So what do these angel investors look for in a business? Here are some qualities angel investors are looking for when making a decision whether to invest or not in a particular business:
- High growth company: your business is likely to grow by 30-40% annually
- Revenue increases: evidence that your business can deliver continued growth over time, to provide a return on investment.
- Strong leadership and management
- Has an exit strategy: your company is likely to be bought or sold
- Ready to go to market: you have a product prototype that you can show to the angel investor (not just a product in your head), even initial partnerships and deals
As to where to find angel investors, read the article Find an Angel Investor for Your Small Business