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Attracting angel investment to fund your business plan is a hot trend as it not only gets you past the lending hesitant banks but of course it ensures that you get get some much needed knowledge, experience and contacts into the business. An experienced angel investor can really ensure that your business plan not only comes to life but achieves its full potential and more.

But by all means don't choose the first and best business angel that comes along with an offer of much needed business finance for your business. Remember that its your idea that the investor is after. Yes of course you as the entrepreneur need to funds but the investor is also looking for the few and far between opportunity with a real potential for a high return.

Only 1% to 2% of all business plans presented to either angels or VCs receive funding. Entrepreneurs need to read the necessary books and speak to individuals with financing experience or expertise so when the opportunity arises, they are fully prepared to present their concept to investors. Incomplete business plans are unacceptable in today’s competitive environment.

Ideas are a dime a dozen. Fundable businesses are those that can demonstrate that they have the products and people to enter a market and either take significant market share or dominate.

Entrepreneurs should use informal networks to be referred to individual angels and VCs. It vastly increases the chances that a business plan will be reviewed. Also, entrepreneurs should target investors that have a history of interest in a sector or the stage of a business.
An entrepreneur should invest capital in his/her own startup. Not doing so is a major red flag for investors.

During the initial conversations with an angel group and during the presentation to the angels, it behooves the entrepreneur to find out which of the members are the real decision makers. This is difficult to ascertain but can be very valuable information because angels are human and they feel safety in numbers. The entrepreneur should focus on the more experienced angels and the managing directors of the angel group.

Investors will be far more likely to invest in a Ltd. Co. (as the liability remains limted to the company) than in theor personal capacity. Some VCs are weary of complex capitalization structures and an entrepreneur risks losing access to larger amounts of capital. In addition, major company decision making can become unwieldy if large numbers of investor/owners need to be consulting. This process may become difficult to manage as when a large amount of stakeholders are incolved. Where possible, aim to keep the the stucture simple and the amount of stakeholders to a minimum.

Finding an angel investor is like finding a spouse. Personal chemistry is critical because it is a long term relationship. This chemistry may take time to build so invest quality time in getting to know the angel. If you are dealing with a group of angels, it is the lead angel that will be on your board or that will manage the investment on behalf of others that should be your focus. It is far better in the long run for an entrepreneur to turn down an angel investment because of lack of chemistry and wait for a better match.

Investors need to be kept appraised of the company’s progress at least quarterly if not monthly. If there are problems, investors should know early about them. Involving them in developing possible solutions or finding the right people to help is a wise course of action. Waiting until the last minute before disclosing major issues entails the risk of lawsuits from an investor for fraud or misrepresentation.

Entrepreneurs are responsible for knowing basic financing concepts, preparing well for investor presentations and choosing their financing partners carefully. A company can sometimes survive operational mistakes, but running out of cash means the company ceases to exist. By having a good understanding the financing process as well as the pros and cons of financing methods, entrepreneurs will increase the likelihood of their company’s survival and long term success.

You as the entrepreneur has as much of a responsibility in finding the right investor for your business as the investor has for choosing the right opportunity. You have spend time and research in creating the the business idea and business plan. make sure you take the time to choose the right investor for your business.

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