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Angel Investors - Your Best Bet for Early Stage Capital.
Raising early stage capital is extremely difficult. There is also a huge funding gap for companies that seek to raise between $250,000 - $1 million dollars.
If you need early stage capital -- especially in the funding gap range -- then I believe that you should spend your time and energy seeking out and meeting with Angel Investors. Do not waste your time going to venture capital funds.
My lens will help you find and raise money from Angels.
What Are Angels?
Angels play a critical role for early stage companies and individual inventors seeking their first investment -- providing money and more importantly lots of added value. This includes both specific industry experience and specific industry contacts.
The term "angel" originated in the early 1900s and referred to investors who made risky investments to support Broadway theatrical
productions. Today, the term "angel" refers to high-net worth individuals, or "accredited investors," who typically invest in and support start-up companies in their early stages of growth.
According to the NVCA, on a cumulative basis, the level of investments made by angels over the last 30 years has been double that of investments made by venture capitalists.
The term "angel" originated in the early 1900s and referred to investors who made risky investments to support Broadway theatrical
productions. Today, the term "angel" refers to high-net worth individuals, or "accredited investors," who typically invest in and support start-up companies in their early stages of growth.
According to the NVCA, on a cumulative basis, the level of investments made by angels over the last 30 years has been double that of investments made by venture capitalists.
Finding Angels
The first place to look for Angels is to check and see if there is an Angel group in your area.
Visit the Angel Capital Association at www.angelcapitalassociation.org/ and see if there is an Angel Group, Network or Association near you. Angels typically only invest very close to where they live.
If there is -- great -- you have saved yourself a lot of time and energy.
If not, search through your local papers and business publications for articles on Angels and companies that received money from them.
Look at advertisements for seminars and conferences -- maybe an Angel is speaking or presenting. Read the bios carefully - Angels don't always outwardly advertise that they are Angels.
Go to the seminar or conference and seek out that Angel and get to know him or her. Find a way to "bump into the Angel" literally if you have to!
Use your professionals. Ask your lawyer, accountant etc if she knows of any Angel investors.
Visit the Angel Capital Association at www.angelcapitalassociation.org/ and see if there is an Angel Group, Network or Association near you. Angels typically only invest very close to where they live.
If there is -- great -- you have saved yourself a lot of time and energy.
If not, search through your local papers and business publications for articles on Angels and companies that received money from them.
Look at advertisements for seminars and conferences -- maybe an Angel is speaking or presenting. Read the bios carefully - Angels don't always outwardly advertise that they are Angels.
Go to the seminar or conference and seek out that Angel and get to know him or her. Find a way to "bump into the Angel" literally if you have to!
Use your professionals. Ask your lawyer, accountant etc if she knows of any Angel investors.
Meeting with Angels
Angel groups typically have "dog and pony" shows on a regular basis. These shows are one of the negatives of raising money from Angels. You need to meet with the Angel group on their terms -- when and where they want -- and the meeting will typically be a presentation to the Angel group. You typically will be one of many presentors.
I highly suggest that you try to get a one on one meeting with at least one member of the Angel group. Get her to be your champion. This is easier said than done. You must insist and be very persistent. Don't take no for an answer.
The good news is that the trend for Angel groups is to form what is known as a "side car fund". There are different variations and names for this fund, but basically the fund is created by a particular Angel group to invest alongside and/or seperately from the Angel group. If the Angel group in your area has a side car fund (or similar) seek out the fund's manager and make a meeting with her. Get her to be your champion.
I highly suggest that you try to get a one on one meeting with at least one member of the Angel group. Get her to be your champion. This is easier said than done. You must insist and be very persistent. Don't take no for an answer.
The good news is that the trend for Angel groups is to form what is known as a "side car fund". There are different variations and names for this fund, but basically the fund is created by a particular Angel group to invest alongside and/or seperately from the Angel group. If the Angel group in your area has a side car fund (or similar) seek out the fund's manager and make a meeting with her. Get her to be your champion.
What You Need to Prepare
Executive Summary, Presentation and Business Plan
You will need to prepare an Executive Summary and a Presentation even before you meet with the Angels. The Executive Summary will get you in the door and you will probably email it to the particular Angel(s) you are trying to meet. Do not, under any circumstances simply spam as many Angels as you can with your Executive Summary. Contact the Angels the old fashion way - by phone and email the Executive Summary for follow up.
You will need a presentation and a business plan as well. It is always a good idea to have a business plan ready - even if you think it is too early to raise money or even if you are not currently raising money.
See the links below for help in preparing the materials you will need.
You will need a presentation and a business plan as well. It is always a good idea to have a business plan ready - even if you think it is too early to raise money or even if you are not currently raising money.
See the links below for help in preparing the materials you will need.
Its Show Time!
Meeting with The Angel(s)
To properly prepare for the presentation you must do your homework. Find out everything there is to know about the particular Angel, Angel Network, Side Car Fund, etc.
See the links below for help in preparing you for the meetings.
Be yourself, explain the problem you solve and why your solution is better than what exists today.
Be very specific about how much money you need and exactly why you need it.
Focus heavily on how you plan to market your product or service.
Know your market including your competition inside and out.
There is always competition - the status quo is a great competitor.
Relax and be yourself
Practice, Practice Practice
No "Pyrotechnics" in your Powerpoint
See the links below for help in preparing you for the meetings.
Be yourself, explain the problem you solve and why your solution is better than what exists today.
Be very specific about how much money you need and exactly why you need it.
Focus heavily on how you plan to market your product or service.
Know your market including your competition inside and out.
There is always competition - the status quo is a great competitor.
Relax and be yourself
Practice, Practice Practice
No "Pyrotechnics" in your Powerpoint
Tools To Help You Raise That Angel Round
- Ten Commandments of Business Plan Development
- These Ten Commandments have helped companies develop business plans for internal use -- and to raise millions of dollars. Let them act as your guide in your quest to develop the best possible business plan.
- Let the Good Times Roll
- Guy Kawasaki's blog provides excellent resources and real life tips on business plans and presentations
- How to avoid really bad powerpoint
- Seth Godin provides tips to help you prepare a really great powerpoint presentation.
- Meeting Tps
- Article that provides tips for meeting with Angel Investors
- Business Tool Box
- SCORE's business tool box provides excellent templates and other resources to help you develop your business plan including financials and budgets.
Angel Investment Resources
- Angel Capital Association
- The Angel Capital Association is North America's professional alliance of angel groups. This fast-growing association brings together the 200 angel organizations in the United States and Canada to share best practices, network, and help develop data about the field of angel investing.
- An Overview of Angel Investing
- This note, in PDF form, provides a very nice overview of Angels, and Angel Investing
- Turning the Corner: Trends in Angel Investing
- Nice little article that describes current trends in Angel Investing
- Angel Groups in Action: Funding Early Stage Innovation
- This is a video of a Panel Discussion on Angel Investing by the MIT Enterprise Forum. Real live Angels participate and there is a Q&A at the end
- Inc. Magazine Covers Angels and Angel Investing in Detail
- Inc. magazine explores the trends in angel investing and provides resources and information for finding and winning over angels.
- Skype Started Out Thanks to Angels
- See how Skype got Angel Money and learn more about the process and how to get Angel funding for yourselves.
- Venture Capital - bizjournals.com
- We've all heard of angel investors, but who are these elusive providers of seed funds? These private individuals invest in entrepreneurial businesses, typically taking an equity position in the company. But it might be instructive, for both angel wannabes and cash-strapped entrepreneurs, to know more about this class of investors:
- How to Find Your Angel
- You've come up with a world-changing idea, or at least an industry-changing idea. You have a business plan. Maybe you've even written some code or built a prototype. Now all you need is those few thousand bucks--or a few tens or hundreds of thousands of bucks--to get your new venture up and running.
- Money - Angel vs. VC: What's the difference?
- Angel vs. VC: What's the difference? Learn the difference between angel money and VC money
- Audio on Angel Market Trends
- Dr. Jeffrey Sohl, UNH Center for Venture Research, discusses recent trends in the angel investor market: growing sophistication in doing deals, taking investments to liquidity without going to the VC markets and partnering with venture capital firms, and increased participation in organized investor groups. He highlights fundamental differences in practice between angel investors and VC managed funds, and underscores the significance of angel investment for the seed and early stage market and the nation's entrepreneurs.
Books on Raising Money From Angel Investors
Attracting Capital From Angels: How Their Money—and Their Experience—Can Help You Build a Successful Company
Amazon Price: $37.96 (as of 12/24/2009) 
Winning Angels: The 7 Fundamentals of Early Stage Investing
Amazon Price: (as of 12/24/2009)
Motivation from the Masters
- Motivation from Google's Founder
- Michael Neuvirth, had the priviledge of interviewing Larry Page - the co-founder of Google on July 16, 2000 - when Google was still up and coming. What Larry Page said then was prophetic - and this interview is a must read for inventors, entrepreneurs and start-up companies seeking angel financing.
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Free Advice From the Masters
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Reply
- ron66 ron66 Oct 26, 2006 @ 1:05 pm
- Hey Michael,
Have been a reader of Enable long long ago and then as now enjoyed your writing regarding innovation and entrepeneuring. I still owe you a dinner, guess it won't be in Tel Aviv now. Btw. things are taking up big time, see my 2 startups: www.op3.com and www.mbarc.nl
Ron -Holland-
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Reply
- gershonson gershonson Sep 4, 2006 @ 7:15 am
- Hi Michael,
I used what I learned from your lens to get funding from two Angel investors. I owe you a "success fee" (just kidding)
Thanks for everything and keep up the good work
Natalie Gershonson
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Reply
- neuvirth neuvirth Aug 31, 2006 @ 3:31 pm
- Hey, I had to see how this guestbook works so I wrote my own blurb
Please tell me how to make my Lens better (or purple as seth godin would want it to be)
Thanks
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Thanks
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Thanks
by neuvirth
Hi. My name is Michael Neuvirth.
My background as a U.S. registered patent attorney, investment banker and startup entrepreneur enables me to meet wit...
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