Raising Money
Angel Investors
By Kevin Turco
Dec 28, 2005, 16:19

An angel investor is simply an investor that provides capital for you business. They act as a “guardian angel” that provides money for you to start your business. As an example, you’ve asked your uncle who owns a auto mechanic shop to help with the capital you’ll need to start up your own mechanic shop on the other side of town.

Business Basics
In business terms, angel investors have some specific traits that are important to understand. Most, like your uncle, won’t invest capital in a business he’s not familiar with or is uncertain of the potential for growth. This means that you’ll have the best chance of obtaining funding by finding an angel investor that either owns or has worked with a company that offers the products and services similar to what your business is offering.

Angel investors also typically require a large part of the startup business’s profits, usually 10 to 50 percent, depending on the investor and level of business risk. If you have no money to start your business and you are okay with sharing the profits, the numbers still might work out in your favor.

Where to Find Them
There are plenty of websites that list angel investors. They are usually listed as individual investors or ‘Investor Clubs’ where groups of investors get together in a seminar setting and listen to hundreds of pitches from start-up businesses. For a list of angel investor groups, click here.

Angels Aren't Always the Answer
Angels invest in businesses that need a relatively large sum of money, are poised for rapid growth and have a clear exit strategy. If this doesn't describe your business, you’ll be best served by targeting friends and family that know your business and have an interest in the product or service your business is providing for capital.

If you think your business can benefit from an angel investor, make sure you know what they are looking for and go after the right one. It will save you a great deal of time and rejection. And remember: Don’t agree to take any money until you’re completely aware of what you’re giving in return. It’s cliché but true: You can’t get money for nothing.

© Copyright 247Advisor.com.

Visit www.247Advisor.com for hundreds of articles to help and resources to help you with your small business.