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The Typical Angel Investor? No Such Thing!

Have you ever wondered where angel investors come from or what type of people you are going to present a business plan to? Is it a Donald Trump type of person – flamboyant and quite wealthy? Or is the investor someone more like your neighbor down the street who has quietly amassed a small fortune yet lives frugally? The truth is that the angel investor could be either person or a group of people.

The stereotype of an angel investor is someone who is a hardened business entrepreneur who has amassed great wealth but is always ready to create more. The image is of someone who swoops in, evaluates the business plan, does some inquiries and then funds a startup with the expectation of high returns. In reality, the angel investor may not be wealthy but is financially savvy.  Many are still employed but looking for a way to grow their money by promoting innovative new businesses.

Angel investors fill a gap that exists between the venture capitalist and the commercial lender. Venture capitalists and financial institutions lend larger amounts with the former willing to accept high risk and the latter expecting minimized risk. Many angel investors invest smaller amounts of money, $20,000 instead of $200,000, but there are no limits so $500,000 up to $2 million is possible. They don’t want to play an active role in the business, but do have business savvy. Mostly they just want to make money.

Angel investors are also groups of people who pool their money to fund startup businesses. They include investment clubs, professional groups like doctors or lawyers and even other entrepreneurs. The reason there is a bit of mystery surrounding angel investors is simply because they keep a low profile, so are difficult to categorize. What you do know is that they are financially savvy, thorough in their evaluation of businesses and hopeful of earning a high return on their investments. So don’t stereotype angel investors because they can be anyone.

More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

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Enter the Angel Investors at the Startup Stage

Financing a small business is done in stages with angel investors usually funding startup expenses. The amount of startup funding needed is figured in the business plan financial section along with projected revenues. Startup funding is actually just one stage of business financing because a new business must be funded from idea conception to expansion.

Businesses operate on a continuum. Initially, seed money is needed to do the original product development, business filings, research and market survey. The  entrepreneur often gets the seed money from personal savings, family and friends, or personal loans. Some even use their credit cards or house equity. In other words, seed money usually comes from personal resources because at this stage the business is only an idea and the risk of losing the money is too high.

Once it’s determined that the idea can be turned into a solid business, the picture changes. The business plan is prepared and the enterprise begins operating. At this point, the first revenues are generated which establishes the fact that the products or services are market viable. It is at this stage, often referred to as the series A or first round investment, that angel investors are approached. However, sometimes entrepreneurs will look for outside investors who will actually pay for startup. In other words, the business doesn’t begin operating until funding is obtained from venture capitalists willing to accept higher risk investments.

Angel investors can also be approached during the second round or series B investment stage. This is the stage at which initial expansion after startup takes place and funding is needed for inventory, staff or marketing expansion.  Later expansions using angel investments would be referred to as series C, series D and so on. In this way, each investor knows by investment reference how their investment ranks in the history of the business funding.

Eventually, a successful business will look for a larger funding source like a bank to finance a major expansion. Angel investors play an important role in the launch of new businesses and enter the business at one of its most critical stages. It’s no wonder they are called “angels.”

More detailed information and useful advice can be found at http://www.funded.com/ Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

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Accepting Economic Challenges Via the Business Plan

Addressing today’s economic environment in a business plan may seem challenging, but it’s also the perfect time to prove you’re up to the challenge. In fact, angel investors are aware that successful ventures in a tight economy are poised for expansion when the economy improves. Successfully starting, managing and growing a business when the GDP is expanding at a sluggish 3 percent (like now) or less is indicative of a business with high growth potential as the economy returns to normal. Though capital access may seem tight, making it difficult to obtain venture funding, the fact is that it’s time like these where some of the greatest opportunity exists.

For example, tight markets mean less competition for both customers and funding. The people who succeed in this type of economic climate are the ones who have solid business plans and excellent ideas. The general quality of brands is necessarily raised because only the best can compete. These companies are attractive to investors looking to fund companies with growth potential.

Another way to look at the business climate is that businesses able to develop business plans that accommodate tight capital markets are more likely to attract angel investors. The reason is due to the fact the investors will recognize that the financially conservative business is prepared for economic downturns as well as upswings. Too many business plans begin with unreasonable expectations given market conditions. Clearly showing how your business will succeed in tight economic conditions is, at the same time, showing how the business is prepared to successfully maneuver during periods of uncertainty or even setbacks over the long term. Compelling business ideas coupled with managed risk is an excellent formula for attracting angel investors.

More detailed information and useful advice can be found at https://www.funded.com/ Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

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Dot.business plan for a Dot.com

Writing business plans to find angel investors interested in funding internet entrepreneurship is similar but not identical to writing proposals for brick-and-mortar only businesses.  A company that is going to be operated solely online still needs a strategic business plan that defines the business in detail, identifies market strategies to build a customer base, analyzes competition, lays out the operations and management plan and presents the financial plan. However, there’s a twist because investors will want to know how you plan on making your website stand out in a very crowded electronic superhighway and how you plan to attract and keep customers, who you will never meet, on the website long enough to spend money. There are millions of websites already up and running, but due to a lack of business planning they are virtually alone in a virtual world.

A strategic business plan for an internet based company must include the traditional business information, but it also requires planning for online design and content, online marketing strategies, website support and upgrades, online product ordering and security. Even planning for customer service has unique features in that contact will be primarily electronic. Angel investors will want to know how you will blend online and offline promotion strategies to insure maximum exposure. Internet marketing strategies address the marketing funnel in which customers are attracted to the website and then moved along a narrowing path to ordering and payment using a variety of well-designed enticements. A well thought out business plan for an internet based business addresses plans for accessing the right kind of business management technology to insure sales are captured using a virtual gateway and online shopping cart.

In other words, angel investors will review the business plan for thoroughness on two levels instead of one – traditional and electronic. Just because the business will be internet based doesn’t mean you can skip the traditional strategic planning. It only means you need to expand and integrate the unique features and requirements of an online business.

More detailed information and useful advice can be found at http://www.funded.com/ Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

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Pros and Cons of having an Angel Investors

Pros and Cons of having an Angel Investors

Financing a business can be a hard task, especially if you do not have the finances to begin with. But the lack of funding should not hinder you from realizing your dream of launching your own business and becoming a successful entrepreneur. With so many financing options available to everyone, all you need to do is explore your options and see which one will suit your profile and your financial capacity. One financial vehicle worth checking out though is angel investors. When getting an Angel Investors it’s like choosing your business partner. Few questions that you need to ask yourself before deciding to go for an Angel Investors. Can you work with them? What can they give you? Is the deal they are offering sounds fair to you? Is the location accessible to you? Now, that we know the question that we need to ask ourselves. Let’s now discuss the pros and cons of having an Angel Investors.

Some  advantages of having an Angel Investors are they prefer to fund High risk businesses. They want to invest huge amount money and would understandably require you to give up huge portion of the ownership and profits. Business angels make investments in virtually all industry sectors. Sector aside, however, it should be noted that what most attracts angels to an investment is high growth potential. Some Angels are also more flexible in their financial decisions than venture capitalists and they have different investment criteria, longer investment horizons, shorter investment processes, and lower targeted rates of return. Raising funds from business angels does not involve the high fees incurred when raising funds from financial institutions. Most Angels also has business experience and so they teaches young business entrepreneur to succeed. This free assistance and advice from an investor is priceless for young entrepreneurs starting out and would not normally be affordable by other means. Angels can be found everywhere unlike Venture Capital which is more formal to the market. Obtaining money from a business angel has a leveraging effect in that it makes the investee firm more attractive to other sources of possible finance. Angel investments certainly heighten venture capital interest in such ventures. They are also instrumental thanks to the loan guarantees they offer their investee firms, in addition to the money they personally invest.

The disadvantage of Angels Investors are less likely to make follow-on investments in the same firm. Unlike, venture capitalists spend around two-thirds of their funds on expansion funding of their existing portfolio firms. Angels also prefer to have a say in the running of the firm, which may force the entrepreneur to give up some degree of control and some may have limited expertise in running the particular type on investee firm they fund, making their contribution less value-added and more interfering. A very few Angel Investors may turn out to be “devils” who have self-serving motives for investment, rather than promoting the good of the firm. Unlike many venture capital firms, Angel Investors do not have the national reputation and prestige of a big-name institution, which can be crucial if the firm is successful enough to seek assistance from an investment bank for a private placement or IPO.

Angel Investors are risking huge amounts of money and would understandably require you to give up huge portion of the ownership and profits. Most business and financing experts suggest that you explore your options first and try to apply for a small business loan through government agencies like the Small Business Administration (SBA). But if you are willing to get an angel investor in, make sure that you and your financing partner iron out the details of your partnership before you finalize the business launching and take his or her money to fuel the start up. You can also check out some angel investors network to increase you’re to increase your chances of landing one angel as well.

More detailed information and useful advice can be found at http://www.funded.com/ Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

More detailed information and useful advice can be found at http://www.funded.com/ Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.