Steve Huey’s Blog

Recently I have spoken with several angel investor groups. These groups add tremendous value in three basic forms.

1. Access to capital – usually seed capital from $100,000 to $2 or $3 million dollars. The angel groups are great sources for investment capital. They take the most risk in their investments and expect to make the highest returns. They usually do not negotiate the toughest terms (full rachets, preferred securities, etc.) but they do expect certain things. The most important is respect. These angel groups are full of people that have been very successful business people and they are a great resource for advice (we will get to that in a moment).
2. Access to next stage capital – usually if a company grows to the point that it needs large capital infusion or First Round Funding then these same angels will most likely be able to introduce you to Venture Capital Firms that have considerably more funds to invest. Venture Capital firms are the next step up in the tree but not always the best investor in early stage companies – even if they want to invest. (I will have a post coming up on VC firms.)
3. Advice and Guidance – this is the most important thing you should consider in seeking Angel Investment. Cash always flows for great businesses or business concepts. I know this sounds strange but cash is not hard to come by if you are experienced and have a good business concept. So if you are fortunate to be able to pick your investors look for the angels that can and are willing to help you. These people are some of the smartest business people and most successful around. It is rare that an Angel Investor is not astute and just some lucky “dude” who made a pile of cash from the dot com boom or inherited it. Usually these investors are flushed out after several “bad” deals.

If you are an Angel Investor – I have one tip for you. Be willing to invest more than just money. Great deals come along rarely so to get the best deals – to make the most money – to have the most fun – invest your time!

This entry was posted on Wednesday, March 19th, 2008 at 3:19 am and is filed under Funding. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.