Many small businesses start with a great idea and an entrepreneur with an unmatched work ethic but fail or underperform due to lack of capital. In the past, a great business concept would win a bank loan or a loan backed by the Small Business Administration (SBA). Today with tight credit markets and most banks afraid to take even the slightest risks, even the best business people with proven track records have trouble getting traditional loans. If you’re a first time entrepreneur with few personal assets, you’re probably out of luck.
Enter the Angel Investor. An “Angel” is a person or company that provides a small amount of seed money to a start-up business in return for a piece of the business. While Angels used to be individual investors or small investment groups, large venture capital companies are now getting into the game as are some large companies such as Google.
The key is finding the right Angel for your business. Think about the type of partnership you want. Do you want a hands-off investor or one who will take an active role in helping your business grow? Are you looking for an investor with expertise in your market or just an interest? Would you be more comfortable with a private individual or do you want to work with a Venture Capital firm?
Once you answer this type of question, you need to connect with an Angel. Doing this can be difficult, but a new online forum makes it considerably easier.
AngelList is a social networking site that is dedicated to connecting businesses with Angel investors. The site is non-profit and does no more than make connections. The deals themselves are done off-line.
As a business owner (or idea owner, if you haven’t actually launched yet) you register on AngelList with a profile of your business and then share it with the type of investors you want to attract. Investors contact you, and you take it from there.
The site is not completely intuitive to use when you land on the homepage. However, the Huffington Post did a great post about it that provides an in depth overview and walks you through all the steps. (Click the links in the article to learn about each one)
Or, just go to Angel.co and click the “Join Angel List” button to get started.