The first step to obtaining investment from an angel investor is to develop a business plan and provide a personal guarantee with your angel investor relationship. Many angel investors' companies have a limited liability company that acts as a nominee for the benefit of the investor. This allows them to receive tax benefits and have limited liability. There are some angel investors that use a partnership for their investment and this may be preferable depending upon your situation.
It is important to remember that you are in the best possible position to receive the capital you need when you are ready to obtain your angel investors' commitment. You should create an attractive business plan that highlights the product or service you intend to sell and your plans to achieve those results. If you have an MBA it is an excellent time to educate yourself on business plans and planning principles. There are many books on this subject that you can easily purchase at your local bookstore. Additionally, you can attend seminars and participate in online forum discussions to better understand your angel investor relationship.
Once you have completed this important task, you can begin the process of seeking a private placement in which the proceeds from your angel capital investment will be used for your business venture. A private placement is a process by which you provide a non-specific, limited amount of money to a private investor who acts as your surrogate angel investor. The goal of this investment is to provide you with enough money to launch and sustain your business while you work it out. Although this process allows you to receive the capital you need quickly, it may be constricted in terms of your own growth and funding options.
Your angel investors' relationship with you is critical to your business's potential success. You must build trust and confidence in order to move forward with your business. The longer you take to develop the relationships and the more credit cards and other investments that you are able to secure, the closer your angel investor relationship will become to be an asset rather than a liability.
Many angel groups provide seed money to new businesses in exchange for shares of the equity in the business. This can be a very effective way for an angel group to provide you with the capital that you need. Typically, angel groups require a percentage of the business' equity in order to provide capital. However, some angel groups offer you credit lines for your business. In this case, they would require you to issue equity as a security for their credit lines. The most effective angel groups are those that provide both credit facilities and equity.
One of the most successful ways for an angel investor to provide seed money is to use the services of a qualified business developer. Qualified developers have developed successful companies from the ground up and can provide you with the expertise and experience necessary to create the next great business idea. In exchange for equity in your company, you would also be able to hire the developer as a consultant for a portion of your operations. This provides you with two important advantages: you gain access to a top-notch management team and the expertise of an industry leader.
As an angel investor, you should always focus on building a relationship with the best business developers possible. These are the people who will ultimately help to grow your business into profitable territory. In the early days of your business development, you may not need to provide additional funding. Instead, you can focus on identifying niche markets, marketing your products or services, and growing your customer base. As you progress, you can consider additional capital opportunities.