There are many businesses out there that need start-up funds for their new business. Often times, the business may be
too young or may not qualify for loans from a financial institution and therefore need to seek capital elsewhere. This is what an Angel Investor does. An Angel Investor is an individual that provides any amount from a few thousand dollars to a few million to a new or young business. This investor is willing to take a risk if they think the business has potential to be success as well as the ability to repay the monies at a nice rate of return. Typically today, the most common return rate preferred by an Angel Investor is 20-30%.  

There may be other reasons why an investor would fund a business. They possibly would do it for ownership equity, to use their skills and experience as a extra-curricular activity, to keep ahead and/or updated on projects or developments within a a particular industry, or to simply mentor an entrepreneur. The benefits to having an angel would be the funds received to start up the business, getting management advice and potential access to valuable contacts they may provide to help you grow your business.  

Being an angel investor is also risky business. For an investor, if the business that he invested in does not succeed, he may lose part or all of his investment unless an “exit” strategy was arranged prior to funding the business. As the business owner, you may have to relinquish some management control over the business in return for the funds that you receive. You need to have a honest and cooperative relationship with the angel investor in order to keep him from taking over the business, but you also need to be able to follow through with your promises too.  

Now finding an angel investor is a different business altogether. You need to know where to look to find the investor that will best suit your business and is willing to fund and take a risk with you. The typical investors usually are in their 40′s, educated and wealthy. They’re usually community orientated people who want to help potentially successful entrepreneurs which in turn makes them more successful. Make your business presentable. Ask people in your network if they know of any Angel Investors or groups in your area where Angels gather. Angel investing is risky but can be extremely beneficial.