If you want to find an angel investor for your small business there are lots of places to turn, and frankly – most of them are a waste of time. That’s certainly not to say that you shouldn’t pursue many paths to find angel investors, it simply means that it’s really easy to waste a lot of time doing it.
Just so we’re clear – all of this content is written by members of the Go BIG Network which is the largest network of startup companies and investors – so we’re going to be a bit biased about our suggestion of where to look (hey, at least we admit it).
Our bias aside, we’ll present the alternatives for finding angel investors and let you be the judge of what works for you.
Go BIG Network
Go BIG was founded and is run by a bunch of entrepreneurs just like you. The site was conceived out of the same frustration you’re probably feeling right now – it’s real pain in the butt to find investors for a new business idea! So we created a company that made it easy for entrepreneurs to get directly connected to real investors.
At Go BIG you can search for specific Angel Investors based on the size of investment they typically do, the geographic areas they serve, and the industries they prefer to invest in. You can then contact them directly through the Go BIG system.
Alternately you can post a “Request” on the system (like a classified ad in your newspaper) indicating what type of investment you are looking for. Investors surf these ads when they are looking for deals to invest in.
At the very least you should create a quick profile of your company which will allow you to indicate that you are looking for funding (it’s free and it only takes a minute). At least this way if investors are looking through profiles of companies they can see what you’re looking for.
The Go BIG Network was specifically designed to connect you with investors, and more investors are being added daily. We’d like to think it’s by far the most efficient way to do what you’re looking to do, but again – we’re a bit biased
| The Pros and Cons |
 | Pros – Fast, efficient way to reach out to a very large network of investors. Investors tend to be more engaged in the site because they signed up to be contacted. Cons – Cannot guarantee that just because you have an investment opportunity that you’re going to get an investment, it can only make the introduction easier. |
On-line Investor Databases
If all you need is a glorified telephone book of names and contact information for investors than another approach would be to use an on-line database of investors. There are many of these services out there and all you would have to do is a search for “angel investor database” or some related phrase to find some of them.
Typically these services are geared toward professional investment firms, like venture capital firms, versus Angel investors who are usually less public about their investment interests. We generally don’t recommend cold calling lots of investors to see if they are interested in your investment. It’s just not a great way to make introductions.
Instead, you’re better served to look for investors that may share some sort of relationships with you, such as investors that are in your home town or perhaps have invested in a business that you are familiar with. No one likes cold calls, and you can be sure investors are no exception.
| The Pros and Cons |
| Pros – Quick, direct access to investors with the ability to get a little background on their investment preferences. Cons – It is what it is – a big phonebook of investors. Investors probably don’t even know they are being listed on the site so you’re pretty much on your own once you have their phone number. |
Capital Brokers
A good option for most startups is a Capital Broker. Just like a Mortgage Broker helps you shop for the best bank to finance your new house, a Capital Broker can help you find the best investor to finance your business. Unlike a Mortgage Broker, however, a Capital Broker screens the candidates they work with to make sure they are only representing deals they believe stand a good chance of getting funded.
Capital Brokers typically work off of a percentage of the deal that they close. For example, if you are raising $500,000, a capital broker may take 10% of the gross sum collected as a fee for services. It’s also common for a Capital Broker to charge a small up front fee to retain their services since the matching process can often take months.
Once again you can do a Web search for “capital brokers” or you can do a search for Service Providers on the Go BIG Network that specialize in “Capital”. We have seen lots of companies find funding through these types of sources and would certainly recommend at least talking to some of these firms about your needs.
| The Pros and Cons |
| Pros – Instant access to existing sources of capital from a trusted source (The Broker) Cons – It costs money. You may incur up front fees and will most certainly incur some sort of back-end fee upon placement. There is also no guarantee they will work with you. |
Networking Meetings & Events
On the surface, going to networking meetings to connect Angel Investors to entrepreneurs seems like a great idea. You just get everyone in the room and let the magic begin. But in all practicality this approach rarely works. There are a few reasons for this.
First, Angel Investors (or just about anyone with money to invest) rarely have a hard time finding investments to put money into. That’s not to say that they aren’t looking for deals, but they certainly don’t have to show up at meeting for deals to find them. So you have to wonder about the quality of the investors that do show up and why they need to come to networking events to find investments.
Second, it takes time and luck to meet investors. Let’s say that you show up for a networking meeting but you just don’t happen to run into the investor that suits you. Does that mean your deal stinks? Not at all. It means you just didn’t meet the right person at the right time.
Networking meetings and events are nice, but they are a little to inefficient to put too much emphasis on. If you’re fortunate enough to meet the right person face-to-face in one of these meetings, then it’s a great use of time. You just have to be lucky.
| The Pros and Cons |
| Pros – Great chance to get face-to-face with an investor. Cons – Who knows if you’ll actually get face-to-face with the right investor? |
Your Professional Network
Getting introductions to investors through your own professional network of colleagues and friends is always the best way to find investors. Unfortunately, most people don’t have a very deep rolodex of investors at their disposal! On top of that, even if you do know some investors, they may not be the right investors for your business.
For example, if you know a bunch of investors who have done a lot of real estate deals, but you are starting a software company, they may have money, but may not be a good fit for your type of investment. You may spend countless hours trying to explain the software industry when what you should be doing is spending that time building a software company.
If you can, you should certainly explore every possible opportunity to network through your existing rolodex. Otherwise, you’re better off looking for an investor that is a better match for your type of investment through a broader search service.
| The Pros and Cons |
| Pros – Great “warm introduction” to investors that is most likely to lead to a deal. Cons – Your network is inherently limited by who you know. |
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 | Finding Angel Investors is a lengthy process that can often consume a great deal of time and emotion. That’s just the way it is. We’ve tried to develop tools like the Go BIG Network to make that process as short as possible, but we can only do so much. Ultimately it comes down to how persistent you are, how good your idea is, and a little bit of luck to find the right investor at the right time. |
http://www.gobignetwork.com/Information/Angel-Investors/Angel-Investors.aspx
