You are a budding entrepreneur with a relatively new business.  You know the odds of a new small business surviving beyond the first five years.  The statistics are not encouraging.  But, you know you can make it.  You simply need to find some alternative sources of funding.  So, what are angel investors anyway?

Angel investors are definitely a unique breed of individuals who take opportunities to invest in small business entrepreneurs. Sometimes, they are simply people you chance to meet who decide you might have a good thing going, so they put their own money into the pot.  At other times, a person may be actively searching for a good new business opportunity to contribute to, in order to help out new business owners.

Either way, these people are angels, because they are more likely to contribute to your success in the early stages.  Although they do expect a return on their investment, it is also understood that, like you, they are risking their own money in the hopes that this great idea of yours will blossom into a profitable business.

So, who becomes an angel investor?

•    Former CEOs
•    People with Common Goals
•    Helpful Opportunities

Essentially, an angel investor can be anyone who has capital to put into your business.  The backgrounds and types of people who choose to become angel investors are as diverse. Some angels may seem like a logical type to become a small business savior.  Others who are willing to believe in your small business enterprise will be an unlikely candidate for such a practice.

Former CEOs

For example, a retired business executive seems like a person who is more likely to find a small business and share their capital.  After all, he/she understand the inherent risks, and the whole gambit of profits and losses. With a good eye for spotting entrepreneurial talent, it would not be such a shock if this type of individual asked for an audience and handed you a check.

Common Goals

Similar to former executives, some angels share a common goal and want to help make sure you have every opportunity to succeed in your venture.  For example, what if your business deals with the development of new products and services for people who are legally blind?  Someone may want to help finance your research and development because he/she has visual problems or has a loved one who might directly benefit from your venture someday.

Business Opportunists

Probably the hardest angel to figure out is simply the business opportunists.  Without any rhyme or reason, someone has chosen to help you out.  For personal reasons only he/she understands, you have been chosen as a recipient of a capital investment.  In other words, as long as it is on the up and up, the investor may not have any agenda, other than wanting to help you out, and maybe make a little money in the process. What these business opportunists bring to the table may be a lot more valuable than money.

Angel Investor Value

If you are lucky enough to have a generous individual come knock at your business door with a check in his/her hand, do not assume money is all that is being offered to help you succeed.  You may also be the recipient of:

  • Entrepreneurial Expertise- Your angel may have already been down the same financial and operational road.  He/she has insight to share to help you grow your small business, while avoiding the pitfalls that can slow down or ultimately kill your chances of success.  Someone who has once walked in your shoes can understand your triumphs and trials like nobody else.  You can greatly benefit from their experiences.
  • Executives- Former business executives have a greater understanding of what it takes to make your business a successful venture. The advice they might be able to offer can be invaluable.  In these tough economic times, it may be the difference between you watching your dream venture fade or be a success.
  • Wealthy Mindset- No, it is not just about the money.  But, people who have already been successful can share their thought processes and how they worked toward business goals.  Especially in the beginning, what was accomplished to make sure the doors stayed open and the customers kept coming back for their product or service?
  • Other Angel Resources- Your angel may also know other angels who may want to invest in your small business enterprise.  As you know, it can take many investors and lenders to give your business the financial boost needed to grow. So, it can be a real asset to know about other angels.
  • Potential Customers- Angels often know resources and people that will lead to potential customers.  Sometimes, they have the inside knowledge and understanding to lead you right to success.  In fact, it may be largely why they have the confidence you will succeed and give them a good return on their investment.

You may be blessed with a goldmine of information as well as small business financing. Take the opportunity to find out about your angel.  He/she may have the key you have been trying to find that will make your small business venture a true success.