Tuesday, March 13, 2012

How to Find Angel Investors

So now that you have the idea, business plan, and (hopefully) a product that will change the world as we know it, all you need is a few thousand bucks--or a few tens or hundreds of thousands of bucks--to get get it up and running. All that stands between you and your success is finding the right angel investor. But where do they hang out?

It’s important to note that the rules for who is an angel investor were set in the late 1960s and have only changed once since that time, thanks to Bernie Madoff whose scandal forced lawmakers to make the recent revision. (They declared that you couldn’t count your house as part of your net worth for determining whether or not you were an accredited investor.)

Because the term angel investor is rather broadly defined, we’re going to talk mostly about the accredited investor or the professional investor that has some experience putting money into companies.

So where where do you find them? Here’s some ideas for starting your search.

Start close to home. Check out your family and friends, as your family members may qualify as accredited investors.

Start with your own rolodex -- Many of your coworkers and acquaintances may count as potential investors and you didn’t even realize.

Formal angel groups -- the Angel Capital Association (http://www.angelcapitalassociation.org/directory/) is the largest trade organization for angel networks and lists the groups that are members in their association.

Informal angel groups -- in your local community are investors who review deals. They are generally led by individuals with experience in angel investor and offer pitch sessions.

Pitch sessions and funding forums -- Other ways to find angel investors is through funding forums and pitch sessions which offer mentorship to practice in advance of pitching for funding. The mentors and coaches in these groups are angel investors or know those who are.

Business plan competitions -- these competitions draw mentors and judges who are angel investors.

Your attorney and accountant - often times your attorney knows potential investors

Social Networks -- LinkedIn is one potential source of finding investors

Web-based -- there are several web-based sites that offer to connect your with investors.