Starting a business or growing an existing one can take a lot of time, effort, and money.
For some, a good business idea doesn’t turn into an actual business until an investor contributes money to help build it from the ground up. Other times, a struggling business may need funds to help them grow, make changes to their processes, and increase profits.
Depending on the type of business a person wants to open or grow in the future, they may need a significant financial contribution to be able to do it, that’s often where angel investors come in. In this post, learn what an angel investor is and what business owners can do to attract them.
What is an Angel Investor?
An angel investor, also called a seed investor, is a wealthy person who invests money into a business in exchange for equity. Angel investors help start-ups as well as established businesses experiencing financial hardship by providing much-needed capital.
Impressing Angel Investors with a Business Plan
Finding an investor is easier with a formal proposal outlining your business framework, goals, and plans. A Business Plan is a tool companies can use to lay out their goals and how they plan on meeting them. It covers the business’s:
- Legal structure (whether they are a corporation, LLC, partnership, or sole proprietorship)
- Product or service that the company plans to provide to its customers
- Marketing targets (such as the audience the company is making its product for)
Creating a Business Plan and presenting it to investors shows you’ve considered how you want to run your company, how you will use their investment, and how you’ll handle debts and make profits.
When determining how much you’ll need to get your business up and running, be sure to consider the various expenses of starting a company, including the expenses that may not be as obvious, like legal or design costs.
For instance, if you plan on incorporating your company, legal fees will need to be included with your start-up costs.
If you’re unsure about what expenses to include and how to calculate your start-up costs, you’ll need to do some research to find out. For instance, you can ask another start-up owner their approximate fees, talk to an accountant, or use an online start-up estimator.
Finding an Angel Investor
There isn’t just one way to find an angel investor, and on some occasions, finding one is a matter of who you know or where you are presenting your material. Individuals have had luck finding investors through friends or work colleagues, at parties or meetups, or online through networking or crowdfunding websites.
There are a few organizations online, such as the Angel Investment Network or Angel Capital Association, that are specifically created to help you showcase your Business Plan and get in touch with an angel investor.
Preparing Your Business Plan for Investors
Angel investors are wealthy individuals or networks who supply start-ups or existing businesses with money to start or develop their company.
When trying to convince an angel investor to provide capital to your business, be sure to create a comprehensive Business Plan outlining how you are going to use their investment, grow your business, and make profits. Being prepared can help investors know that their money has been spent wisely and that you’re serious about your business idea.