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VC Secrets: Private Investors (Angels) and How To Reach Them

From: Venture Planning Associates Inc. <Expert-zine@VenturePlan.com>
Date: Sat, 18 Oct 2003 00:36:45 -0400
Message-ID: <211570-220031061843645875@mail3.autocontactor.com>
To: site-comments@w3.org

Dear ,

As promised, here is your new issue of the Expert-zine.

Private Investors (Angels) and How To Reach Them 

  By William F.(Bill) McCready
  CEO/Founder, Venture Planning Associates, Inc.
  http://www.ventureplan.com

Informal venture capital provides 80% of all initial funding.

It's easy to assume that the majority of entrepreneurs obtain
funding from venture capital firms. In fact, nearly 80% of
all investment in small startup companies comes from two groups:
  - FFA (Family, Friends, and Associates) and 
  - Angels (Private Investors).

While it may be possible to raise money from family and friends,
it is not always the best idea. Often, the FFA funding source 
is less sophisticated than an experienced investor, and may have
unrealistic expectations. 

If at all possible, use FFA funds as debt, or preferred,
non-voting stock. This will help isolate this group and make
it easier to raise capital for subsequent stages of development
later from 'professional' investors.

INVESTMENT EVALUATION CRITERIA

Private Investors are as diverse as entrepreneurs. There is
a wide range of profiles in terms of their industry expertise,
business experience and, most importantly, their ability to
work effectively with you.

Successful angels make their investment decisions based on
four fundamental criteria: management, market, products,
and financial opportunity. They evaluate each criterion from
the perspective of minimizing their risk and maximizing
their return.

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WHERE TO FIND ANGELS

Here are the profiles generally attributed to Angels:
  - Most are entrepreneurs themselves. 
  - Generally middle aged; 47+ looking for diversification. 
  - Have high incomes, but are not necessarily millionaires. 
  - Most are highly educated with advanced technical degrees,
    M.S. or Ph.D. 
  - They are very active investors averaging 3-4 deals per year. 

These individuals can be reached through numerous sources. They
attend trade shows, venture capital type meetings, and visit universities to find
deals. Finding them is a matter of
personal networking. Many will remain hidden from the
individual entrepreneur, so using an intermediary is often the
only way to meet them. Examples of intermediaries:

  - 'Gate Keepers', who screen projects for wealthy investors,
    and usually represent three to five individuals, a trust,
    family investment pool, or a group of medical professionals. 
  - Business Development Consultants who work specifically with  
    startup, business development, mergers and acquisitions. 
  - Bankers, finance companies and savings or investment houses
    such as stock brokerages. 
  - CPA's, tax, accounting and bookkeeping companies. 
  - Attorneys, bankruptcy courts, and arbitration groups.

PRIVATE INVESTOR BEHAVIOR

  - Angels will provide equity plus loan guarantees. 
  - Angels usually invest with 2-3 others. 
  - Angels bring more than money to the table, often filling gaps in  
    management skills. 
  - Angels usually do not want control. 
  - Angels request voting common stock or partnership interests. 
  - Angels are looking to exit their investment in 3 - 4 years. 

PRIVATE INVESTOR INVOLVEMENT

Will private investors want to be involved in your business?

  - 21.7% will work part time in the business as employees. 
  - 27.0% will offer consulting help, sometimes with reduced
    or no fees. 
  - 15.1% will agree or ask to be on the Board of Directors. 
  - 19.0% will review reports and other documents. 
  - 17.3% will want to work full time for the business.

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   6. Dealing With Banks [how to get a loan every time!]
   7. Private Investors (Angels) and How To Reach Them
 
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*** ============================================== ***

Watch for the next issue!
___________________________________________________________

This FREE newsletter is distributed by subscription only. 
Please feel free to pass this issue, in its entirety on
to friends and associates.
____________________________________________________________

http://www.expert-zine.com / http://www.ventureplan.com

Teri McCready, Publisher  
Tel. (858) 457.3434 / email: marketing@ventureplan.com

5370 Toscana Way                 San Diego, CA 92122 USA

Copyright 2000-2002, Venture Planning Associates, Inc.
ISSN: 1529-1316
____________________________________________________________

    You are receiving this message because you subscribed
    to this e-zine either from one of the following web
    pages or from the site of one of our affiliates.

     http://www.expert-zine.com
     http://www.venturemap.com/
     http://www.ventureplan.com/
     http://www.ventureplan.com/venture.seminar.html
     http://www.ventureplan.com/capital1.html
     http://www.ventureplan.com/vcpreview.html
     http://www.ventureexperts.com

*** ======================================== ***

   * Many sites tell you WHERE to get funding.
     ... We show you HOW to get it!* 
         Bill McCready, CEO/Founder
         Venture Planning Associates, Inc. 
         For more information visit http://www.VenturePlan.com.





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Received on Saturday, 18 October 2003 00:31:44 GMT

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