| > | | | | make their pitches to a panel of angels. |
| | | | |
| Commercial Finance- Angel Money explores the world | | | | What are your chances of obtaining angel investor |
| of angel investors. During these times of hard money | | | | money? It is about the same probability of being |
| what are the pros and cons of working with angel | | | | guaranteed a place in heaven; in brief, it is not good. |
| investors? Are they really venture capitalists with | | | | Less than one out of ten proposals for angel investor |
| wings? | | | | financing receive funding. Some angel investor groups |
| | | | | fund about one start-up out of every 1000 |
| The Merriam-Webster Online Dictionary defines angel | | | | submissions. Many deals are rejected because there |
| as: | | | | is insufficient growth potential, or management lacks |
| | | | | talent or skills to succeed, or the product or service |
| 1 a: a spiritual being superior to humans in power | | | | simply does not have the requisite potential for |
| and intelligence; especially: one in the lowest rank in | | | | spectacular results. On the other hand, some deals |
| the celestial hierarchy; | | | | are funded because the angel has a special interest in |
| 2. an attendant spirit or guardian | | | | a particular area that the product addresses, such as |
| 3. a usually white-robed spirit or guardian of human | | | | cleantech products. |
| form in fine art | | | | |
| 4. messenger harbinger i.e. angel of death; | | | | How do you find angel investors? One good national |
| 5. a person like an angel ( as in looks or behavior); | | | | listing is You can also look on the internet for angel |
| 6. Christian Science- inspiration from God; | | | | investors that are local in your area. This is important |
| 7. one (as a backer of a theatrical venture) who aids | | | | because most angel investors like to invest within 50 |
| or supports with money or influence | | | | miles where they are located because it is easier to |
| | | | | keep on top of local investments. |
| Who are angel investors? They may be an individual, | | | | |
| or a group of individuals with money to invest in | | | | Are angel investors really angels? Are they any |
| start-up businesses in exchange for various forms of | | | | different than venture capitalists, just smaller in size? |
| ownership and control of the entity. Many angel | | | | These are very difficult questions. Some angel |
| investors organized into organizations or groups that | | | | investors nurture their offspring more than others. |
| pool their money to make larger investments and | | | | Consider the statement of Josh Kopelman, a |
| spread the risks of failure among many investors. | | | | venture capitalist with a new company called |
| | | | | FirstRound. FirstRound funds entrepreneurs |
| Many start-up businesses borrow seed funding from | | | | with big ideas in the $250,000 to $750,000 range. Mr. |
| family, friends and acquaintances to provide capital to | | | | Kopelman sticks with them long enough to |
| pay the initial expenses of starting a new company. | | | | determine which business plans will work and which |
| It is difficult to raise significant amounts of money | | | | should be taken out back and shot according to |
| this way. Most venture capital firms will not consider | | | | the January 21, 2008 issue of Fortune Magazine. |
| investments less than one or two million dollars. Angel | | | | |
| investors fill the gap by providing risk capital for | | | | Angel is the name of a song written and |
| potentially high growth companies, usually in amounts | | | | recorded by Jimi Hendrix. It was released on the |
| of $100,000 to $1,000,000. These investments are | | | | album, The Cry of Love, in 1971. Here are the lyrics: |
| extremely high risk since approximately 8 out of | | | | |
| every ten such investments result in failure and loss | | | | Angel came down From heaven yesterday, |
| of investments. Thus angel investors look for | | | | Stayed with me just long enough To rescue me.... |
| opportunities that have potential to return over 10 to | | | | And she told me a story yesterday; About the |
| 20 times the original investment within a relatively | | | | sweet love Between the moon and the deep blue |
| short period of time. | | | | sea. Then she spread her wings high over me. She |
| | | | | said, I’ll come back again to see you |
| Most startup businesses that compete for angel | | | | tomorrow.... And I said fly on, my sweet angel. Fly on |
| investor money are in a pre-revenue stage. As such, | | | | through the sky. Fly on, my sweet angel. Tomorrow |
| they are not eligible for bank financing, purchase | | | | I’m gonna be by your side.... Sure enough, This |
| order financing or accounts receivable financing for | | | | woman came home to me. Silver wings silhouetted |
| exponential growth. | | | | against a child’s sunrise.... And my angel, She |
| | | | | said unto me, today is the day for you to rise. Take |
| How do you obtain money from Angel investors? | | | | my hand, you’re gonna be my mind, And she |
| The process is difficult. A due diligence package | | | | took me high over yonder..... And I said fly on, my |
| should be prepared for the angel’s which will | | | | sweet angel. Fly on through the sky. Fly on, my |
| include all details of the start-up company’s | | | | sweet angel. Tomorrow I’m gonna be by your |
| organization; who the executives and board of | | | | side..... |
| directors are; their resumes, experience and academic | | | | |
| backgrounds; the business plan for growth; specific | | | | Jimi Hendrix never made much money during his |
| details on the product or services including projections | | | | lifetime. This album was released after his death. He |
| regarding economies of scale; and an analysis of the | | | | truly was an angel as a musician and his estate has |
| potential marketplace for the product or service; an | | | | earned millions of dollars from the sales of his music |
| exit strategy; and an analysis of competition in the | | | | over the past forty years. His music and guitar |
| marketplace regarding similar products or services. It | | | | playing technique has inspired millions of people. He |
| is necessary to create a power point presentation | | | | literally changed the way the guitar was perceived |
| for angel investors with an enthusiastic principal of | | | | and played as an instrument. From a musical point of |
| the start-up company extolling the virtues of their | | | | view, during his life he was the next big one. |
| idea to convince angel investors this is the next | | | | |
| big one. The presentation can occur in a | | | | The bottom line: Are you the next Jimi |
| conference room one on one with the angel, or at a | | | | Hendrix of the business world? If so, angel |
| dog and pony show where five to ten prospects | | | | investors may be the answer to your prayers. |