Tuesday, January 29, 2008

Angel Investors

At the Connecticut Venture Group meeting last week, Andy Hanson, who is an angel investor, told the audience that finding angel capital in Connecticut is not easy. To illustrate his point, he asked for a show of hands -- how many angels in the audience? 11. How many entrepreneurs? About 150. Andy mentioned three angel groups in CT -- CT Angel Guild, Angel Investor Forum, and Private Investors Network.

Angel investing, according to Andy, fills that gap between friends and family funding and venture capital. It's for early and seed stage investors. Typically, an angel will invest in a company with a product and at least one customer who has written a check. The business must be scalable; i.e., readily expandable/growable. The angels want to get at least 10 times their money back. That makes it hard for entrepreneurs to get funding.

For every 10 plans an angel reads, he or she will see 3 owners and fund 1 or 2 businesses. That's why having a great executive summary or one-page angel sheet is essential. To get money from the angel groups Andy is connected with, go to the Connecticut Venture Group and fill out their seed/early stage form. http://www.cvg.org/entrepreneurzone.asp

If you need advice about filling out these forms or improving your executive summary, please visit my website: www.upstartbusinessplanning.com or email me at: upstartwyn@gmail.com.


Anonymous said...

Interesting article. I want to run my own business, but I'm a little shy of having enough capital. An angel investor would be great and very beneficial. I'd like to buy a business instead of starting one from scratch, but I haven't had any luck looking for the right one. Do you have any suggestions? Thanks.

Anonymous said...

@Amy -- I've been told that while angel investing is a great way to earn capital, it can get very messy and complicated. I'd believe this since you're answering to a single person instead of a bank with thousands of accounts. Anyway, not to deter you from looking into it, I suggest looking into your local small business groups. They might be able to assist you.

I also recommend checking out BizTrader.com, which is an online global marketplace where you can invest in, buy, and sell a business. You can also find a lender, which makes everything easier because it is a good place to find a business on the Internet. Check it out and good luck!

Wyn Lydecker said...

If you want to have your own business, you must ask yourself why. Is it for the independence or some other reason?

Before you start or buy a business, I urge you to spend some time thinking with pen and paper in hand. Answer these questions:
What am I passionate about?
What do I love doing?
Is there something I've always wanted to do?
Do I see a need in the marketplace for the product or service I want to make or sell?
Can I make enough money doing what I want to do?
Do you have enough experience in that field to be able to make a success?
What business experience do you have?
Can you apply this experience to your business?
What jobs will you need to farm out to others?

After you've answered these questions, you can talk to the local chamber of commerce about your interests. They may have ideas for you. Go online and read trade websites and trade publications in the field you're interested in. Go to trade shows. Visit businesses like the one you want. Talk to the owners. (They may be looking for a buyer, or they may have great advice for you.)
Read Inc. Magazine.
In other words, do your homework.

Right now, I'm writing a series of tips about starting a business. Tune in everyday for the next tip.

Good luck.