Wednesday, April 23, 2008

Angel Investors: An Alternative Source of Financing for Small Business

If you have exhausted your pursuit of traditional bank financing, you may want to consider using an angel investor to get that great idea off the ground. Read on to find out more about who these angels are, what they can do for you and where you can find them.

What is an Angel Investor?

Typically, an angel investor is an affluent individual seeking to invest in a startup company and provides their own capital for that startup. In return, an angel investor generally expects some form of equity and control in the company. Sometimes angels group together in a syndication to pool the financing; they are known as angel groups or angel networks. Angel investors may also be corporate investors who are looking for strategic synergies from an alliance with an entrepreneurial company.

Find out more:

Wikipedia’s “Angel Investor” article gives further background on angel investors.

Entrepreneur.com has a how-to page called “Angel Investors” which is devoted to the concepts of what an angel investor is, who might use one, how much they cost, what the investor expects in return for their capital and how and where to find them.

An article appeared in the March 17, 2008 edition of Canadian Business called “Angel Investors: Spreading Your Wings”. Written by Megan Harman, this article discusses exploring all financing options like those provided by angel investors.

Where Can You Find an Angel Investor?

Check out About.com Canada’s article called “How to Find an Angel Investor”.

Below are some links to some organizations that bring investors and businesses together in order to secure financing and allow businesses to grow:

The National Angel Organization (NAO) considers itself to be “Canada’s Voice of Angel Investors”. The NAO’s directory includes links to 21 angel groups from 8 provinces in Canada as well as links to U.S. national and regional angel groups.

The Angel Capital Education Foundation (ACEF) provides information on angel investing and lists 22 Canadian angel groups with links to their websites from across the country in its ACEF directory. There are many more links to American groups and ones located in Mexico.

Calling itself “North America’s professional alliance of angel groups”, the Angel Capital Association (ACA) is an association of 265 angel organizations in the U.S. and Canada; the ACA member directory with Canadian and U.S. links is also available online.

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