Steps to seeking angel capital

Written By Steps To Faculty Published July 28th, 2010

Is your small business struggling and in great need of a cash infusion? If so, then you are not alone. Many small businesses right now are in need of some cash inflows to stay afloat and cover overhead expenditures. However, obtaining any kind of loan is nearly impossible for businesses under four years of age. Banks usually want four years of financial statements and solid rates of return before a penny is lent to you. Venture capitalists will not touch any business that does not yield at least $19 million and have growth rates of 25% over a three year stretch. So what is a small business owner to do? Turn to angel capital or angel investors.

Angel capital is an equity arrangement where you are selling part of your business to the angel investor in the form of equity. For example, if you need $300,000 and the value of your business is at $900,000, then you are selling a third of your business in the form of stocks, which is similar to corporations, to your angel investor. Many business owners enjoy such a trade, while others get nervous. The angel investors also get seats on a board in your company and have some say in the direction of your firm. Such mentoring and guidance is welcomed by most entrepreneurs. If you believe this is your only alternative, then the following is a compiled list of excellent angel investors or havens for angel capital.

Step 1 Go west

San Diego Tech Coast Angels (techcoastangels.com) is a generous benefactor to many small business owners. Seventeen years ago they invested $500,000 in a placement service, which has since sold for $70 million.

Step 2 Find many investors

The Angel Capital Education Foundation (angelcapitaleducation.org) is a comprehensive directory of angel investors according to business industry. This is useful as you will want to get investors who understand your specific industry.

Step 3 Go to the top

Angel Capital Association (angelcapitalassociation.org) is an excellent reference source for direct links and application forms to hundreds of angel capital funding sources.

Step 4 Spend less

Often, angel investors charge up to $2,000 to solicit their funds. If you are a new business and strapped for cash then consider the Gathering of Angels (gatheringofangels.com), which only charges $100 to consult with you on your business and angel capital funding needs.

Step 5 Join an angel investment club

Vegas Valley Angels is an angel capital investment club that specializes in early to mid-stage business development. This club, however, is focused on keeping your company in business over the long haul, not just to recoup their angel investment.

Start taking your business in a new direction today with the help of some angel capital. Please visit stepsto.com for more great business advice.


Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.