Sep 20, 2010

How to Meet Angel Investors

 

How to Meet Angel Investors: Join A Business Boot Camp

There are business acceleration groups rooted in business incubators that hold boot-camp-style programs that provide initial seed money and mentoring services. One such program is Philadelphia-based DreamIt Ventures, which offers select companies between $10,000 and $25,000 in return for a 6 percent passive equity stake. Entrepreneurs simply need to complete an online application and must be willing to live and work in the city of brotherly love for three months. Upon completion of the program, DreamIt sets up opportunities for entrepreneurs to present to investors.

TechStars is another mentorship-driven seed stage investment program. TechStars operates three months at a given time in four cities: Boston, Boulder, New York City, and Seattle. Class-size is limited to 10 companies that each receives up to $18,000 in seed funding and a chance to pitch to financial backers.

Dig Deeper: Angel Investor Directory


How to Meet Angel Investors: Get On Television

It was an appearance on the ABC's Shark Tank that helped CEO Sean Conway secure financing and give credibility to his company NoteHall.com, an online marketplace for college students to buy and sell call notes and study guides. Shark Tank is a reality television show that gave 45 budding entrepreneurs a chance to convince five self-made, multi-millionaires (the Sharks) to part with their hard-earned money.

A 2007 graduate of the University of Arizona, Conway along with fellow alum Justin Miller used $70,000 they put together from savings, early inheritance and bar mitzvah money for initial funding. But a year into the venture they were broke and investors were skeptical about investing in the Tucson-based firm.

Conway applied to be a contestant on ABC's Shark Tank, appearing on the show in October 2009. He was offered $90,000 from real estate mogul Barbara Corcoran, after agreeing to give up a 25 percent equity stake. Even though Conway decided to go with a much larger investment with a different evaluation outside the show, his television appearance led to several e-mails and calls from people wanting to partner with the company. Conway also participated in the DreamIt Ventures program and secured $500,000 in investments. NoteHall.com expects to reach $900,000 in revenues this year.

A second season of Shark Tank is slated to air in early 2011. ABC is casting now for the next round of entrepreneurs who can apply online for an opportunity to pitch their business concepts, products, properties and services. The Sharks ended up making 20 deals with investments totaling over $4 million during the first season. But these moguls aren't just out to invest; they too have a goal—to own a piece of the next big idea (sometimes as much as a 50 percent ownership stake). 

Dig Deeper: 9 Tips for Winning Over Angels


How to Meet Angel Investors: Ask Around

The old fashion way to meet angel investor is through word-of-mouth. Check with your personal contacts such as your lawyer or accountant. Any business associates and acquaintances that may have clients who are accredited investors.

If you don't already belong to an industry-specific professional organization or trade group then join one, says Williams. Attend meetings, conferences, and social events on a regular basis. Successful business owners will be able to point you in the direction of investors. Get to know who they know.

Also attend investor fairs and make presentations at these gatherings. Your local SBA office or local university business school can provide information on such events.

Dig Deeper: 5 Questions for an Angel Investor


How to Meet Angel Investors: Expect to Get Scrutinized

While each network or group may have varying requirements for meeting angel investors, all have a similar extensive screening process. The average angel accepts three deals for every 10 considered. The goal of making contact with successful industry investors is to make a good impression and get an opportunity to present your pitch.

Anything that doesn't appear realistic in the initial application will get kicked back or rejected, says Ravi S. Pemmasani, managing member of Go4Funding.com. For instance, stating that your company doesn't have any competition raises a red flag for investors. An angel investor also should be able to understand your business model during the initial contact, which could be an online profile, he adds.

As with every personal relationship, it is best to locate a common ground with a prospective angel, says Williams. "It is also important to follow through any leads that have been established."

Dig Deeper: Angel Financing: Dos and Don'ts for Entrepreneurs
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