| FINANCING |
| Finding Rewarding Resources for Spirited Growth |
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What is ANGEL CAPITAL or a FINANCIAL ANGEL? Is there an angel in your corner? How do I find one? Do they fly in on wings! With halos brimming with money? Financial Angels can be anyone with money. They may be friends or family. An angel may be a bank IF you qualify. Most often, though, the angels we're talking about here are high net-worth individuals or groups of individuals, so called band of angels, who have money for entrepreneurial activity. The term, "Angel" was coined by Broadway insiders to describe the well-heeled backers of Broadway shows. Angels are sometime referred to as "direct" or "private" investors. Although the bar for the range of investments made by angels is constantly changing, there are several things that separate angels from Venture Capitalists (VC's). First, in general, angels will invest less than VC's. The ever-changing range is anywhere from $100,000 to $750,000. However, Bob was involved in an initial round where one angel put up $3,000,000 in a promising startup. In addition, angels will usually invest earlier in financial rounds than VC's. These rounds may be called seed capital, start-up capital or bridge rounds of financing. Secondly, angels invest in people, NOT projects or proposals. The deals are usually high-risk-high reward situations - just like yours. However, business plans must be good enough to get you into a personal meeting with these private investors. The average angel is 48 years old with an annual income of near $100,000. They have a net worth in excess of $750,000. They are college educated. The average investment in your company (read that as you) by a single angel will be less than $50,000. Most angels like a company close to home. Other questions that you need answers to are: Are there BAD angels? How do I find the right angel? How much return or the company do they want? How long does it take to find an angel? How long does it take to close a deal? Are there angels in cyberspace? You can find angels anywhere if you know how to look. However, always look for angels with more than money. Look for expertise, connections and above all else, compatibility with you. What is VENTURE CAPITAL? There are those who refer to Venture Capitalists (VC's) as vulture capitalists. Bob does not (except with tongue in cheek). In today's arena, small VC's will invest in a range from $1,000,000 to $5,000,000. Large VC's will place in the range from $5,000,000 to $100,000,000. Exit time is within a range of 3-10 years, depending on many factors. Smaller VC's will want some control. Count on them having a seat on the Board of Directors. Larger VC's will most always demand control unless the entrepreneur is someone very special. Remember that even vultures have their place in the food chain. Bob is a member of the San Diego Venture Group, attends most meetings but has never personally seen a VC devour anyone. |
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Cederdahl Consulting and Coaching 4109 Nabal Drive La Mesa CA. 91941-7039 Phone 619-670-1122 Fax 619-670-9363 |
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