Tips

• Angel investors can be an option for start-ups with the potential to earn high profits.
• Expect close scrutiny. Many angels are former entrepreneurs and like to be involved and give business advice.
• Angel investors tend to specialize, so look into their investing history to ensure there’s a good match.

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  Small businesses looking for financial help from an angel often turn to individuals willing to invest in promising, start-up opportunities. Angel investors can be a good funding source to consider after youve tapped your friends and relatives. But angels usually dont write blank checks. Theyll want to see progress and a way to exit the deal down the line with meaningful profits. So expect angel investors to do a lot of research and careful investigation into your business plan.

  Be thoughtful in approaching potential investors. Biotech investors, for example, dont want to hear about a clothing manufacturer. A scattershot approach is likely to turn them off. Industry associations, local trade groups or, in some states, business-incubator centers can help point to potential angels.

  Angel investors often invest through groups or networks. These provide due diligence, extra research, access to potential deals and shared expertise that one person operating alone generally doesnt have. For instance, one member of an angel group might have background in a particular industry or the know-how to set up deal terms, sharing that knowledge with the other investors.

  Angel investors are usually thorough, so dont expect to get your money quickly. It could take several months to meet with different individuals or groups and answer all of their questions. (There are exceptions, including the case of Google, which got funding from an angel before its cofounders finished their presentation to him.)

  Because theyll own a part of your company, theyll likely want a say in major decisions, and theyll watch to see whether you listen to them. Dont expect them to write a check and walk away. Many angel investors are former business owners who want to help people like themselves. They may be able to provide good advice based on their previous experiences.

  Getting funding from angel investors isnt easy, but it can be done if you take the right approach and are a good match with their interests. And the benefits can beyond the money for your business, but their expertise in both in business operations and your industry niche.

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