Angel investors provide financing that bridges the gap between self-funding and getting capital from a financial institution. Generally, angel investors fund start-ups with the hope of earning big rewards.

In order to approach an angel investor, browse through online lists that you can found on the websites of the Angel Capital Association, Center for Venture Research, the Angel Capital Education Foundation etc. While going through the listings, drill down to the regions where these investors are located. Usually, angels like to fund businesses that are geographically close to them. This is so that they can set up meetings conveniently and keep an eye on their investment.

Many angels regard themselves as employees who fund a start-up. They usually fund the company and then help the entrepreneurs to position themselves in the market so that they are ready for their first round of financing from institutions.

While looking out for an angel investor, do some research on the previous ventures that the angel may have funded. Some specialize in investing in specific sectors while there are others who invest in nay kind of venture as long as it looks promising.

After you have short listed the angel individuals or network for whom you will be making a pitch, get down to research. Find out what is likely to interest the potential investor, how the network of angels runs, the kind of investments they have already made etc.

The next step is to get to know your angel investor. If you are able to build up a rapport, the angel will receive your business plan better or may refer you to their network.

The best way to interest an angel investor is to show them the kind of returns they are likely to get. Generally, angels look at making four times the amount they have invested, within the next three years. This is why you need to talk to an angel about rewards not just the risks. This is common newbie error you should avoid.

 

When you approach an angel investor, the key is to be upfront and realistic. Avoid making the mistake of overvaluing your company even though you may think your product is the next big thing. Keep in mind that angels typically have been in your position several times over and bought and sold many a business, so they always know when you are inflating rewards or the value of your business.

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