A venture capital expert offers some guidelines to business owners looking for an "angel."
If you're looking for an angel -- a high-net-worth individual, preferably with an entrepreneurial background -- to invest in your business, Bill Wetzel, director emeritus of the Center for Venture Research at the University of New Hampshire, offers some guidelines:
Look close to home. "Angels will want to be actively involved in your business, which is great because they'll contribute know-how as well as capital," says Wetzel. To facilitate that involvement, he suggests searching for investors within a 50-mile radius of your corporate headquarters. "You may have to expand your horizons, but definitely stick within a day's drive."
Concentrate on successful individuals within your industry. "Angels like to invest in companies whose business lines they know something about. Save yourself a lot of rejections by doing some preselection."
Approach individuals who like to take calculated risks. "Since there's no such thing as a national directory of angels, you've got to cobble together your own list. A few types I've got a hunch about are private pilots, airplane owners, and sailboat racers. They like risks, but they also spend a lot of time doing their homework so they can gain control over those risks."
Give yourself time to carry out an effective search. Wetzel expects it to take six months to one year just to locate the right prospective angel. "Then he or she might spend another six months investigating your company and putting together the deal. Be prepared."