Online Angel Investment Networks

Getting the needed funding for a business is really challenging presently with this recession. Businesses need to look at alternative forms of finance nowadays to get their businesses and ventures funded. In this article I discuss some of these alternative forms of business finance to include angel investors, angel investor networks and venture capital networks. I also discuss how to determine whether you Angel Investment or Venture Capital for your business funding requirements.

Angel Investment

• Informal, yet sophisticated investors, who specialize in early, seed investing. Be sure to have a very well prepared Business Plan that contains a solid Executive Summary, Marketing Plan and Strategic Plan. Have excellent financial projections which you back up with realistic assumptions about your market.
• Angels are great to use in the very early stages to develop your Company to where a Venture Capital Firm would be more apt to invest.
• Angel funding is usually much quicker to obtain than venture capital, finding funding often in a couple months.
• ROI expectation often less than VC; 20% annual compounded ROI is a good starting point for Angel Investment.
• The funding deal can be structured very flexibly, in any structure that makes sense to all concerned.
  • Combination of Equity & Debt is common.

• Angels can be located with local Newspaper ads; in VC Clubs, breakfast clubs or networking events.

  • Can find angles through attorneys, accountants, consultants, financial planners, brokers, etc.
  • Networking is an excellent way to find angels.

• Angel or Venture Capital?  Here is some guidance in determining whether your finance needs require Venture Capital Investment or an Angel Investor:

  • Amount of money being raised for the current round:  Less than $1M should be Angel, unless you find a VC Fund that funds seed rounds and/ or you have a pre-existing relationship with a particular VC (and there’s a strong fit).
  • Determine the total amount of money that needs to be raised over the life span of your Company:  If you can get to good, positive cash flow for less than $3M, angels will probably be best.
  • Type of Company:  VC looks for enormous investment opportunity, returns and economies of scale, verses linear scale companies.  Angels are less aggressive and happy with smaller companies and smaller investments.
  • Experience:  First-time entrepreneurs without much of a track record will find it easier to attract Angel money.
  • Your Network:  VC ties often come through personal and professional networks.  Develop strong ties prior to approaching a VC Firm.  Angels are great on referrals but not necessary.
  • Hunt for your Lead Investor:  Typically have 3 rounds of private finance with rounds 2 and 3 following a strong, successful lead investment.  Be picky about finding the original, lead Angel.

Online Investor Networks and Online Lending

• Venture Capital Network is the original and probably the best. The Go Big Network is another good one.
• These types of venture networks will take investor monies and pool them with other investors. They also present investors with venture funding opportunities.
• Beware of proprietary protections and privacy concerns.
• Consider hiring an experienced Business Plan Consultant to make sure you have a really solid Business Plan, Loan Package and Investment Overview in place.
• Be careful not to shop your deal excessively, as that will diminish your future success on subsequent finance rounds (private equity is a small world and they want fresh deals).
• Can be a good stepping stone to VC Funding.
• Often offer helpful resources, online chat rooms and professional relationship introductions.
• Borrowing Online:  The web has a lot of alternative small business finance options.  One is On Deck Capital:  they look more at your Company’s Cash Flow than your Credit Score and Tax Returns.  They collect small daily debits alternatively of monthly payments.

About The Guest Article Author – Frank Goley, Business Consultant

Frank Goley has an experienced background working with small and medium size businesses as a business consultant, business turnaround consultant, business plan writer, business plan expert, small business consultant, business coach, business plan consultant, marketing consultant, business planner and online marketing consultant, and seo consultant for ABC Business Consulting. He has been helping companies to succeed for many years. Frank wrote his first business plan over twenty years ago. He is an expert in developing business plans, marketing plans, funding plans, strategic plans, turnaround plans, web marketing strategies, and project specific business plans. Frank is the author of a business plan book, The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 50 published articles and e-books on business success strategies. He also writes the Business Success Strategies Blog and publishes the Business Success Newsletter.