Angel investors or just “angels” are a small business startup-funding mainstay. Lately, though, the phrase “angel investor” has been watered down to mean almost any investor that invests in a start-up company.
Since most start-up entrepreneurs or bizowners have difficulty raising money, they feel that if anyone will invest in their business, they must be sent by God, so they must be an “angel”! Because I have raised a lot of money from individual investors, especially at the start-up stage, I have a somewhat different definition of an angel than just any investor who invests in a start-up.
IT’S ABOUT MORE THAN MONEY
To me an angel investor is a person who buys into a new business with not only the expectation of making money on the investment, but also to help the business grow and gain traction in the early stages.
In many cases, the investor falls in love with the business and wants to get involved in more ways that just money. A really good angel investor can help a startup by ccontributing their experience, their contacts, and their wisdom. In many cases, angels can help a new bizowner get organized properly. They can provide branding, marketing, vendors, and even customers.
Angels can be worth a whole lot more that just money — if you find the right ones. That is the key. There are good angels, but unfortunately there are bad angels, as well.
AN ANGEL AT WORK
In the mid 90’s I was trying to manufacture an inteactive video device that would allow children to interact with the TV and VCR (remember VHS?) by attaching a handset with a suction cup to the screen of the TV. We were real novices at this and consequently we were getting terribly behind and spending way too much money.
Fortunately we found an “angel” that really got what we were doing, and he ran an electronics manufactuing firm, as well.
This man pretty much said to us, “Boys, get out of my way! I will take it from here!” In 60 days he solved all of our problems, got us back on track, and even saved us significant manufacuring costs. This man not only invested in the business, but because he knew what he was doing, he also saw how his expertise could really save our butts, and he really like that he could give something back to help others. He’s one of the best examples of a really good angel investor!
Remember, once someone invests in your business they become part of your business. Just as an investor is interviewing you to see if he or she wants to invest, you as the bizowner, need to interview them to make sure they will fit into you company, your culture, and your long term goals.
Source: http://www.allbusiness.com
