Angel investors are like mentors, and entrepreneurs who
seek funding
from them should expect the investors to have more than just
an interest in the company. Angel investors are known for active participation in
their invested company, including the involvement in day-to-day company operations
and business decision-making. While the process of obtaining angel capital is quite
competitive, entrepreneurs should consider the nature of the relationship with the
investor, as well as other key components that may increase their chances of obtaining
angel capital. Below are some steps new business owners can take in order to get
funded by an angel investor.

1. Direct association
One of the best ways an entrepreneur can increase their chance of getting funded
by an angel investor is when they either personally know the investor him/herself
or have been introduced to the investor by a mutual friend. Having this common ground
greatly improves the chances of obtaining
funding for a new business
venture because of the established trust in knowing
someone directly. While obtaining funding is not always guaranteed, no matter how
close or distant the relationship is, the entrepreneur can use this direct association
to his/her advantage and work hard to win the investor over.

2. Entrepreneur due diligence
Another way in which new business owners can increase their chances of
receiving angel funding
is by investigating prospective angel investors
and/or groups. Through this type of due diligence, the entrepreneur will have a
better sense of who will fund their business, the individual profiles of the investor(s),
and the companies the investor(s) have funded in the past. This knowledge will enable
the entrepreneur to sort out the best investor according to previous experience
and success. In addition, the entrepreneur can also network with people at conferences,
seminars, and business meetings, bringing the entrepreneur closer to meeting an
angel investor and to the prospect of getting funded.

3. Promising pitch and business plan

When meeting with angel investors,
entrepreneurs
need to present a flawless pitch
and prepare detailed business proposals regarding their product or service. A flawless
pitch will show angel investors the entrepreneur is taking the business endeavor
quite seriously and reveal they have invested ample time in preparing the verbal
presentation. In addition, presenting a business plan is a sign of a responsible
entrepreneur who is ready to take their new business to the next level.

4. Financial projections
Before approaching angel investors for
funding
, entrepreneurs first need to analyze the cash needs of the new business.
It is imperative this be done before the meeting because it is quite difficult to
obtain more startup capital if the initial financial figures are not accurate. With
this in mind, the entrepreneur is encouraged to present the amount requested and
financial projections for the new company to the angel investors. While the financial
forecasts are only calculated predictions, these figures are very important to an
angel investor since they prefer backing companies that show a fairly high promise
of financial success. When entrepreneurs present calculations of expected returns,
it shows angel investors they have researched their financial needs, the existing
market behavior, any major competitors, and consumer responses to the products being
offered.

5. Management team

While preparing to meet with angel investors,
entrepreneurs
need to prepare the
biographies of the entire management team. This is needed because angel investors
are not only interested in the elevator pitch and business proposal; they are also
interested in the management experience of the people who will be running the new
business. A successful company always has the support of a solid management team,
and angel investors always pay close attention to who these people may be.

Conclusion
An entrepreneur looking for startup capital for a new business needs to begin their
search early. It requires a lot of time to find
sources of funding
, as well as potential angel investors who can close the
deal. On average, it may take up to six months to
get funding
since the angel investor screening process is quite competitive.
This is also the amount of time required for venture capitalists to make their decision.
Therefore, it is only appropriate for a new business owner to search for funds early
on and be patient with the whole application and screening process.

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