August 14, 2020 is a daily online magazine covering small business news. We help entrepreneurs transform ideas and innovations into greatness.

Articles for Entrepreneurs


Angel Investor


Raising Money from Angel Investors

Professional venture capital firms invest about $12 billion a year in helping start and develop businesses. Angel investors invest $60 billion a year.

Angel investors throughout the United States provide more than money. They bring experience, enthusiasm, knowledge and contacts to the table.

Many angel investors are successful entrepreneurs who have "been there, done that" and who want to pursue another success but do so at arm's length. As such, they can be very valuable to an aspiring young company. Other angel investors include lawyers, accountants, and other accredited investors eager to participate in higher-risk, higher-return investment opportunities.

The problem is that it can be hard to find an angel investor who is willing to invest in your company.

Mind you, it's difficult but not impossible. Warren Ng, for example, co-founded an online market research startup called Napkin Labs. Based in Boulder, Colorado, the company makes collaboration software for businesses and communities. Warren and his partners were able to raise $1.1 million from an angel investor to grow the company.

So what does it take to raise an angel investor financing round? Here are a few things you should be thinking about as you start your search for angel investors.

  • Be Visible. Introverted entrepreneurs rarely are successful in raising money from angel investors. You have to be out there. Pursue every possible opportunity to present your business plan to potential investors.
  • Be Buttoned Up. Your pitch and business plan should be polished and professional. If your business concept isn't solid or you can't articulate it well, you will never be able to raise money from investors.
  • Find Like-Minded Investors. Investors invest in things they are interested in and like. Whatever area your company is working in, you will want to talk to potential investors who have an interest in that area. Don't pitch a biotech company to a successful software entrepreneur who doesn't have a passion for medical entrepreneurship. Instead, find somebody who is passionate about healthcare and wants to invest in healthcare companies.
  • Show Progress. Don't pitch investors with just an idea. Even without money, you should be able to make progress with your company. Get out and build the company without investment. Create prototypes. Talk to prospective customers and get letters from them stating that they will likely buy your offering. You need to show traction and show results in order to convince angel investors that you have what it takes to be successful.
  • Be Realistic About the Economic Environment. After an economic crash or recession, angel investors go into hiding. When the economy is good, angel investors are more likely to be actively investing. If the economy is bad, you may have trouble getting angel investors on board.
  • Have a Plan B. Seriously, it's hard to raise angel investment money. Did we mention that already? So, have a Plan B. What will you do if the investment round never comes through? Can you sell consulting services to jump start cash flow? Can you get customers to pay for a beta version of your product? Where there is a will, there is a way.

Related Articles

Want to learn more about this topic? If so, you will enjoy these articles:

Business Investors

Conversation Board

Do you have something to say about angel investors? We'd love to hear your comments, questions and tips.

Questions, Comments, Tips, and Advice  Code Image - Please contact webmaster if you have problems seeing this image code
Problem Viewing Image
Load New Code



Additional Resources for Entrepreneurs

Search Engine Marketing

Social Marketing Optimization

Business Forms

Business in the Jungle - Business in Fiction - Negotiating

Radio Ad Costs

Newspaper Advertising Rates

City-Specific Resources for Entrepreneurs

Small Business Insurance

Global Entrepreneurship

China & Entrepreneurs