Securing Angel Investors

by Tim Berry

You should probably focus your search on so-called “angel” investors, not loans, and not the mainstream venture capitalists. Angel investors are a wide range of different investors, not as formally established as venture capitalist firms, and not as homogenous a group either. An angel investor might be a successful business person, a wealthy individual, a group of professionals such as doctors or dentists, or a local investment club, or somebody else completely different. Your angel might be a rich uncle.

Here’s the basics of finding angel investors:

Finish your business plan. You need a plan for at least two obvious reasons:
- to help you estimate how much money you need;
- and to communicate with your investors.
Create your executive summary. You need a compelling business plan summary to communicate with investors. Prepare a brief but exciting email, one page at most, outlining the growth prospects, type of business, and potential investor payoff. Prepare an investor summary memo (unless you have a Business Plan Pro plan that does the summary automatically).
Look for potential angels. We have ample resources for you on www.bplans.co.uk and in our site network. Consider Harold Lacy’s “six degrees of separation” method. Your angel might be somebody you know, recommended by somebody you know, or a local investment club, business person, perhaps even a local development agency. Search the Web, search your contacts. Lacy recommends that you ask everybody you know, not whether they want to invest, but whether they know anybody who might want to.
As the search narrows, research your possibilities thoroughly. This is no time for mailmerge or email processor software. As a potential investor emerges, find out whether he or she prefers a phone call first, a meeting, a complete business plan, a summary memo, email, fax, or whatever. If you have Business Plan Pro, then you can eventually email a potential investor with your Secureplan.com reader password for viewing the plan; first, however, you need to establish some interest.
As you sense you are getting closer, make sure you have a good relationship with an experienced lawyer. You definitely need the right legal help to make a real deal. Make sure your lawyer has been through similar deals; if not, then they should recommend a specialist instead. Investment deals are serious business and you can be assured that the investor is going to use every trick in the book to miinimise their down side risk.
And if you don’t find anything, what’s next?
- Think it over. Maybe the investment filter process is a good thing.
- You might try other means instead of angel investors.