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Follow us on TwitterI'm in California and I'm looking for Angel Investors for my business. I know that there are a lot of rich software execs out here, but I don't know much about angel investing, how it works, how to meet them and what to say. any advice?
The first thing you need to do is decide if your type of business needs Angel Investors. Lots of people think of the term Angel Investors, or Venture Capital, as just another term for 'money'. Many very small businesses out there, mom & pop type businesses should NOT go after Angel Investors as a first source of capital.
I met a girl who recently opened a dog grooming shop in my neighborhood. She was 26 and always wanted to be in that business. She found a location, went to the bank and took out a small business loan for $30,000 to get it started. Her first year in business should net her over $100k.
However, she has no plans on growing this to a $100M corporation, or going public. She pays back the loan over a few years at x% and thats it.
Most Angel Investors aren't giving out loans. They Invest and become part owners. ie: They take stock, which is a percentage of your company. They eventually want you to grown the business into something VERY big and eventually sell it, after 5-7 years, giving them 10 Times what they originally invested.
You need to come to terms with what percentage of the business you want to give this person for his/her money (valuation). How much involvement you want from this person, and their expectations.
If you decide that you need to Raise capital from Angel Investors, this is a good set of 2 books to read: How to Raise your First Million Dollars VOL 1 & 2
Its a step by step on the capital raising process, with 10 Interviews with Angel Investor Groups, including California Angel Investors, and a directory of 50 Angel Investor groups in the US.
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