Online Incorporation MaxBlog

by Dave Lavinsky
Growthink

Angel investors are individuals who invest in emerging business ventures.  Angels typically provide both capital and know-how to companies who are in either their start-up or expansion phases, whether corporations, LLCs, or still a sole proprietorship. To reflect the increased risk of investing in such firms, angels seek a higher rate of return versus traditional public stock investments.

Angel investors fulfill the financing need that exists between capital provided by friends and family and capital provided by venture capitalists. Individual angel investors often write checks from $25,000 to $100,000. Recently, angel investing has become more organized, and angel groups often invest from $250,000 to $500,000 at a time to deserving ventures.

Angel investors often have similar financing criteria as venture capitalists. They want to see proprietary intellectual property, a large market size, management team members with expertise and experience and a current valuation that allows for a good return on investment.

In identifying and attracting an angel investor, companies should seek angel groups that are located in their region. For instance, the Tech Coast Angels have funded over 85 Southern California-based companies since 1997. When seeking individual angel investors, it is critical to network in order to create a personal connection between yourself and the angel. Also, ideally the individual has experience within your specific field so he/she can provide industry contacts and operational expertise in addition to capital.

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Growthink Business Plans has developed over 200 business plans for clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. For more information go to http://www.growthink.com

By Jawwad Farid

Yes to have a pot of money simplifies life and removes a number of complications, but is that the right short term goal? The amount of time that you spend searching for venture capital, may be better utilized working with customers, building a product, figuring out how to get to revenues and getting your business closer to your next big productive milestone.

I say this because I have two different experiences. My first involved spending more than two years looking for elusive VC cash, ignoring real customers who could have supported and carried the business further. End result - death by business plan rewrites and the search for a better valuation.

My second experience involved building a business from scratch with no VC funding at all. In the same amount of time it took the first one to fail, the second supported 12 employees and became cash flow positive from its 6th month. Today the businesses grosses 250,000 dollars in revenues in a country where the average per capita income is less 800 dollars a year. Yes it is small but it is ours.

If you run a small profitable business or would like to run one and are not the sharing kind, venture capital is not a good fit for your future plans. Venture capital is expensive risky debt with very onerous terms. The terms make sense when you have pre-established credibility, need to hit key milestones quickly, grow to a certain size inorganically, change the world in a short span of time AND are indifferent to who ends up with the business you have built with your hands.

I would take a look at what I want to achieve and if the four conditions mentioned above don’t apply, see if I can find some way of getting there without VC funding. It will be a slower, more painful journey but at least I will get somewhere.

Jawwad Ahmed Farid,

Desi Startup, Blue Screen of Death,

Alchemy

http://bluescreen.alchemya.com

http://alchemya.com/blog/DesiStartup/desi.html

http://alchemya.com

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