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Do you know the meaning of an angel investor? Are you planning to get an angel investor for funding your start-up? How can you tell that an investor is good for your business? Well, angel investors are people who invest in your business using their own capital and get some business equity in return. 

Though they provide the capital for the start-up, they do not have any voting rights in your company. If you are looking for an angel investor, below are some tips that will help you to determine the right one for your start-up:

Get References

Some companies prefer to work with accredited investors to ensure that they are getting involved with someone with experience in investments. However, select an individual or an accredited investor, always check with references, and follow up on their previous investments. By conducting this research, you can determine how they approach the process and what you will experience in partnership with them.

Align Goals with the Investor

After finding some potential angel investors, discuss the common goals you both have. It will help you to see how close you will get aligned in the future. It includes the required capital, equity, decision-making control, and investment time frame. You can also remove the confusion risks by establishing goals. 

The goal includes how to grow a start-up with a potential exit point for an angel investor. You can build a better working relationship by determining these goals in the beginning.

Develop a Relationship

Once you and the angel investor discuss the goals, you can build a relationship with the angel. Then, find out how involved that person will be with your start-up. For example, some angel investors want to get involved with your business and act as an advisor based on their previous experience. However, some of them prefer to invest and act as silent partners.

So, discuss in advance whether an angel wants to work with your start-up as a silent partner or advisor. Of course, it would be best if you both want to build a harmonious future working relationship.

Consider it as an Interview Process

It is very important to operate your start-up business with patience. Consider each call as an interview process and behave accordingly. Put value into what you and your start-up will do in the future. You must work only with an angel investor who can invest money into your vision. Also, ensure they are ready to cooperate with you in scaling that dream into reality.

It means you should take notes during each call and go through every interaction with prepared questions. Also, do a lot of research on your prospects and go through it properly before meeting with them.

Final Thoughts

Raising capital is very stressful, especially for people in business for the first time. So getting potential angel investors and building the network is highly valuable, but it takes a lot of time. However, once you get the right person, you will indeed make a success and run the business smoothly.

Linda Rawson, who is the founder of DynaGrace Enterprises (dynagrace.com), an 8(a) graduate and EDWOSB, contributed to the content of this blog. She is the founder of GovCon-Biz. For further information, please connect with Linda on LinkedIn, or contact her at (800) 676-0058 ext 101.

Please reach out to us at GovCon-Biz should you have any questions.

GovCon Cheatsheet By Linda Rawson

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