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Four Things Angel Investors Look For While Considering an Investment
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Are you starting a business, or looking to expand your business? Angel investment may be a good option for you. Angel investors are experienced investors, and usually are successful business people in their own right. That means they can provide you with more than just capital - they can provide you with valuable advice to help grow your business.
If you are seeking angel investment, then you should know how to approach these investors correctly. And in order to do that, you need to understand what angel investors are looking for, and how they judge potential investment opportunities. Here are four things angel investors want to see before they invest.
1. High ROI Potential
Investing in new companies can be risky. As a result, angel investors won’t fund your company if they don’t think they’ll make a significant return on their investment. Angel investors want to hit “home runs” - investments that return as much as 100 times the amount they invest. Research performed by the Center for Venture Research indicates that angel investors receive an average annual ROI of 26% from all their investments. Most angel investors are, however, prepared for a failure rate of at least 33%.
2. An Entrepreneur Who Is Familiar
Angel investors usually prefer to know the entrepreneur before they would invest in the business. As a result, a lot of angel investing takes place among “friends and family.” But smart entrepreneurs network to find friends and family members who can introduce them to high-net-worth individuals.
3. Chance to nurture a new business
Angel investors love to nurture the business they invest in, in order to help it grow, and to make more profit from it in the process. Most angels are experienced businessmen themselves, and use their existing client networks to boost the revenue earning potential of the new business. They may lend their expertise at every step, from hiring capable staff to helping build networks of loyal clients. Angels become even more interested in funding a venture if they have handled a similar business in the past. This is why angels look for companies where they will be able to add value to the business.
4. Ability to Be in the Thick of Things
Finally, there are some angel investors who simply love to be a part of the action. For them, it is exciting to invest in a new business; to watch it grow and prosper. They find it a lot more exciting than investing in the stock market, where the investor has a lot less direct contact with the business.
If you’re having trouble writing your business plan, consider hiring a business plan consultant. Or, use a simple business plan template to finish your plan quickly and easily. |
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