Investors' Circle – Impact Happens Here
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Here's Why Angel Investors Say No To Entrepreneurs
Angels, or private investors, invest more money in more companies at an earlier stage than venture capitalists. They are the lifeblood for seed and start-up businesses. Why do they say no?
Angels Just Don’t Get It
Entrepreneurs who face rejection by angel investors often blame it on the angels: those investors cannot understand my wonderful technology, or the angels won’t bother to take the time to understand. Some of this is just a means to protect the entrepreneur’s tender ego, but it does point out how there can be critical gaps in communication: an entrepreneur thinks he’s doing a good job explaining the deal, but in fact he’s not getting through at all.
Angel Was The Wrong Audience
Angel investors invest smaller amounts of capital in earlier stage companies than venture capitalists do. They also take more of an interest in the day-to-day management of companies they invest in. Investors aren’t usually interested in investing in life style companies, ie., companies that provide a comfortable life style for the owner, but don’t have expansive growth opportunities. They want to see a company that can reach significant earnings in a short amount of time.
Lack of Preparation by Entrepreneur
Entrepreneurs are often guilty, in their eagerness to get started building their company, of seeking out angel investors before they are prepared to present their deal or carry on negotiations. Angel investors often have a great deal of business experience and can ask the kinds of probing, difficult questions that quickly puncture inflated projections or poorly thought out strategies.
ROI/Exit Strategy
Entrepreneurs emphasize bringing capital into the company; investors are quite reasonably interested in getting capital out of the company. Unless the entrepreneur can convince the investor that a lucrative exit is possible within a reasonable time frame, the deal is unlikely to get done.
Management Team
Angel investors invest in the management team of a company. Often there’s only the business plan, at best a prototype product, and no revenues. If the management team is weak or inexperienced, angels are reluctant to invest.
Deficiencies in the Presentation by Entrepreneurs
It is an unpleasant fact that entrepreneurs with good ideas can still miss out on obtaining funding because of poorly prepared business plans, executive summaries, and other presentation materials. A great business plan does not raise capital for a company (you need a great management team as well), but a poor plan sends a signal to investors that the founders may also be sloppy in the way they run the company.
The Concept or the Idea is Flawed
Some ideas have zero chance of getting funded, and that’s just the way it is.
Entrepreneur Was Not Able To “Sell” the Investment
Part of raising capital depends on simple sales skill, and if the founder of the company does not have that skill, he needs to develop it quickly or have someone with that skill assist him with the presentations to investors.
Subjective Factors
The decisions made by angel investors are not cut-and-dried based on analysis that leads to an easily obtained conclusion. Angels operate in an environment where the crystal ball can get extremely cloudy at times, and must rely on their instincts honed through many years of being on the firing line in their own companies.
How to Avoid Hearing ‘no’ from an Angel
1) Spend a lot of time discussing how the management team’s background will lead to growth and profitability for this venture
2) Do not skimp on the time and effort spent on developing and practicing the presentation to angels; Don’t ‘wing it’ with angels
3) Don’t assume everyone can pick up on technical jargon; keep the presentation in layman’s terms as much as possible
4) Test your business model out on experienced business people and obtain their feedback before seeking funding
5) Present alternative ways the investor can exit the deal, when and how.
Dee Power is the author of several nonfiction business books and a guide on how to write a business plan She writes on the topics of how to reduce credit card debt
Why Choosing Angel Investors Is The Best Choice For Entrepreneurs
Angel investment is a type of financial equity that is provided by Business Investors to budding businessmen in order to start a firm that operates on their dream idea. There are several people who have remarkable business ideas that are quite feasible if supplemented with appropriate funding and nurtured with the help of experienced industry personas. Erstwhile, the only options for the masses were taking loans from their families, friends, banks or moneylenders, as well as maxing out several credit cards. Then, venture capitalists arrived but they took up an active role in the management, which did not provide the entrepreneurs with the requisite freedom for Starting Small Business.
This led to the birth of Angel Investors, who were professionals with considerable wealth and extensive industry experience. As time passed, the investors combined to form angel networks, which pooled their resources and provided the requisite funds to individuals who had exceptional business ideas. They did not interfere with the working of the business, but offered valuable advice to the budding businessmen in order to allow them to grow on their own. As the networks comprised several people, the funds soon began to be distributed to individuals interested in establishing their business in diverse industries. For example, the same network can grant the financial help to a person who is Starting Small Business of manufacturing automobile components as well as to one looking to offer commercial cleaning services.
This type of investment option is gaining popularity all across the globe at a rapid pace among Angel Investors and budding businessmen, alike. The investors put amounts up to US$ 1 Million in the plans easily depending upon the soundness of the business plan and the expected rate of growth. Typically, an angel investment network looks to grant the capital, contacts and industry expertise to the entrepreneurs for a period of 3-5 years. After this period is over, the network looks to exit the business and take its share via mergers & acquisitions, strategic sales or IPOs. For an individual who is struggling to find the required amount of capital to start his business, such Business Investors are a godsend.
Usually, the angel networks grant these loans to individual who dream of Starting Small Business in the following fields:
Agriculture & food processing
Banking & financial services
Biotechnology, pharmaceutical & life sciences
Clean technology & water
Education
Healthcare
High-end BPO / KPO
Internet
IT products & services
Media, entertainment and mobile VAS
Retail
Telecom & embedded domains
Travel, tourism & hospitality
These are conventional lines of work that are considered safe by all business Investors, not just angel networks. But, upon the submission of the business plan, if the members find it to be feasible and fruitful, they also award the funds to entrepreneurs looking to make it big in peripheral industries.
Jacklin jonse has a 4 long years of career proficiency of working as a content writer. Throughout the years, Ms. Jacklin has been writing content about SEO Company India and business investors related issue and has offered some of the outstanding contents to our viewers. My favorite business investors site is: http://www.indianangelnetwork.com
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Convincing Angel Investors Your Business is Worth the Risk
You have a great idea for a business but venture capital firms are unwilling to lend you startup funding for any of a number of reasons. Venture capitalists are more likely to fund large startups that may need as much as $ 5 million and up. It only seems appropriate that one of the alternative sources of funding is named the angel investor. An angel investor is a private investor who invests personal money in an entrepreneurial company.
Many Angel Forms
Angel investors come in many forms. An angel investor might be a professional like a doctor or an attorney. Some angel investors are retired people who have discretionary money. Much to people’s surprise, the typical angel investor is not a millionaire.
Many private investors are business associates. Business associates are any persons or businesses that might be willing to invest in your company because they are familiar with your business idea and find it to be workable. They may be people who will be working for you and want to invest in the company or potential suppliers who have a vested interest in you starting a business that will use their products.
There are even angel investors who are fellow entrepreneurs and simply want to help other entrepreneurs like themselves get started.
Angels are Everywhere
If you get the idea that angel investors are just about anywhere you look, you would be right. Many times the small business entrepreneur only thinks in terms of traditional funders and doesn’t consider the fact that plenty of people including business associates are willing to lend money. In fact micro-lending is actually a network of angel investors who want to help small entrepreneurs pursue their goals.
How do you find angel investors? The simplest way is to take advantage of services that cater to entrepreneurs seeking startup money.
Though you can search for funding through friends or business associates, the matchmaking service will bring together budding entrepreneurs and angel investors quickly and efficiently.
he angel investor actually functions in a manner similar to a venture capitalist. One of the main differences is that angel funders are as interested in things like leveraging their abilities and promoting entrepreneurship as they are in making a profit. Some angel investors will want to play an active role in your business while others will be silent investors. If an angel investor wants to participate, it gives you excellent access to knowledge and experience that can increase your chances for success.
Preparation is Important
When you decide that angel investing presents the best startup funding opportunity, it’s important to be well prepared. Your business idea must be well thought out and your business plan needs to be thorough. Don’t be deceived by the fact these investors are called “angels”. They are solid, experienced, knowledgeable investors who will ask tough questions and expect well prepared answers. You will need to be prepared to discuss your idea, marketing strategies, location, website development, customers, staff and expenses.
Get helpful info about startup business funding and angel investors at http://www.funded.com.
Angel Investors is a big boon for startups
Providing capital in need is what Angel Investors strive for in these tough times. It is not easy to get the seed money for a startup in these difficult times and that is exactly why people turn to really good fundraisers for kicking off their new ventures. Entrepreneurs coast to coast are on the lookout for business friendly services that can help them to startup a venture that would yield profits.
Simple form
You could be a first time entrepreneur or someone who has burned his or her fingers in earlier businesses and are desperately looking for money to get back on track. To begin looking for funds for your business, you need to take a survey and fill out a simple form. The survey is also required to assess your needs based on the operating stage of your company. It could be in the midst of a severe financial crisis or requires funds to come out of a temporary problem. You could face other problems like a shortage of operating capital as well.
The fund raising technique is becoming increasingly popular as business owners saddled with credit problems are also opening up to the idea of allowing investors some equity. The money is available for hi tech, ordinary tech to non tech businesses as well. If you are sure that your venture will make sizable profits, like over 20 percent, you could be in the reckoning for the much needed finances.
From seed to mezzanine financing, Angel Investors are always there to lend a helping hand and entrepreneurs coast to coast are not willing to let the opportunity of easy funding pass them by. If the return on investments is more than 20 percent, you could benefit from easy funding to the tune of millions of dollars starting from $ 500,000.
If you are confident that you have hit upon an idea that can generate good money, funding is not a problem these days.
Don’t lose hope in your venture
It is not only capital growth and revenues over a period of time that Angel Investors look for, but a sustained growth on a regular basis as well. Your business has to have the capacity to steadily grow over time as Angel Investors look for a reasonable return on their investment. Traditional forms of financing have taken a hit in the wake of the worst recession experienced coast to coast, but novel schemes riding on the back of capital growth are making it easy for entrepreneurs.
Getting venture capital for startups was the first casualty experienced by entrepreneurs after the financial markets collapsed a few years ago. Easy money for pumping into new projects is great for startups that would otherwise lose interest in implementing their ideas for profit making ventures. Raising capital is a big issue these days and business owners are looking at various options like Angel Investors to get started off in their chosen ventures.
Still not satisfied with your investment decision? Why not take a look at Angel Investors to get the best investment advice? Visit www.ventureworthy.com
4 Things Angel Investors Look for in an Investment Opportunity
www.docstoc.com – Click to Download 25000+ Business Forms & Templates! 4 Things Angel Investors Look for in an Investment OpportunityClick Here To See More From This Expert: www.docstoc.com Eytan Elbaz, the former Head of Domain Channel at Google (google.com), reviews what angel investors look for in young companies. Reviewing these considerations will help you prepare for your next angel round. Docstoc has over 20 million business and legal documents to help you grow and manage your small business and professional life. Thousands of how-to articles and videos with fresh content uploaded every day. Attorney reviewed documents to save you time and money. Connect with us on Facebook – www.facebook.com Connect with us on Twitter – twitter.com Connect with us on Google+ – plus.google.com Keywords: “Eytan Elbaz” Google “Small business” Entrepreneurs Entrepreneurship “How to start a business” “Starting a business” Startups “Startup business” Financial Success DIY “Docstoc Videos” Docstoc