Attracting Angels To Your Business

September 29, 2006 by Dane | 12 Comments
In Financing

Rhonda Abrams in USA Today:

Pop quiz: If you try to raise money from investors, what’s your chance of success?

Well, if you’re approaching those individuals known as “angel” investors, the answer is a surprisingly high 12%. That’s the result of a study just released by the Center for Venture Research at the University of New Hampshire. During the first half of 2006, one out of every eight businesses that pitched to angel investors received funding.

While you may not think 12% is great odds, compare that with trying to raise money from venture capitalists (who receive hundreds, if not thousands, of proposals for every one they fund) or getting money from your brother-in-law.

The term “angel investor” covers a broad range of funders — all the way from a sophisticated financier who invests hundreds of thousands of dollars in a cutting-edge new technology, to your rich Uncle Bob who invests $25,000 to help you get your mobile dog grooming business off the ground.

What all these angels have in common is that they’re investing their own money in entrepreneurial businesses — usually start-ups. Venture capitalists, on the other hand, invest other people’s money, typically millions of dollars, and, increasingly, invest in later-stage companies.

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