If you’re starting or expanding your company, angel investment may be perfect for you. Angel investors are often successful business people and experienced investors, and they can do more than provide funding. They can also provide valuable assistance with starting or expanding your company.
If you want angel investors, you need to know how to attract them. You must know what they are looking for and how they decide on where to invest their funds. Angel investors have four primary concerns:
1. Potential for an excellent return on their investment
Angel investors won’t invest if they don’t believe they can make money, as angel investing is risky. Angels are seeking investments that will make them as much as 100 times their initial investment. According to the Center for Venture Research, angel investors earn an average annual return of 26% across all their investments. Unfortunately, at least one-third of their investments will fail.
Angel investors prefer to know the entrepreneur in which they’re investing. Angel investing is often done through networking with friends, family, and business colleagues. Savvy entrepreneurs also look to friends and family members to introduce them to wealthy individuals.
3. Nurturing a new business
Angel investors enjoy being involved with the businesses in which they invest. This, of course, protects their investment and increases potential profits. Most angel investors have business experience, and they can even tap into their existing client base to increase their new business client base. They may be involved in many aspects of the company, from hiring employees to networking with clients. Angels are particularly interested in investing in businesses similar to successful businesses they’ve built in the past. Angels want to work with businesses they can assist and grow.
4. In on the action
Some angel investors just enjoy the rush of being a part of a new business. They love seeing it grow and flourish. They find it more interesting than the stock market, where they are distanced from their investments.