Angel investors are successful entrepreneurs in search of investment opportunities with promising businesses. Theyâ€™re looking for a piece of the action, but they also have investment criteria and expectations. For example, theyâ€™ll typically expect an equity stake in the business. Angels will often give a business money in exchange for equity.
Theyâ€™ll also be looking for a return on their investment â€“ angels invest in promising companies with an expectation of making money within a reasonable time frame. And theyâ€™ll want to know what the end game is. For example, is a public offering or acquisition likely?
Itâ€™s important for a business to decide if itâ€™s ready to approach angel investors. It may need funds to get to the next level, but that doesnâ€™t necessarily mean itâ€™s ready for angel investments. The best time to approach angels is when a business owner can clearly demonstrate that an angel’s investment will help grow their business. If a business is still in its early stages, theyâ€™ll want to see â€˜proof of conceptâ€™ including a sound business plan, working prototypes, customer contracts and a record of sales.
Angel investors will want the same information for an established business, but theyâ€™ll also want to know what your vision is moving forward.