Many dream of receiving millions of dollars because they have been backed by angel investors or venture capitalists. This takes an excellent business plan which shows the potential to earn millions of dollars, lots of networking, and a willingness to give up control of the business to let "the professionals" grow your business.
Angel investors and venture capitalists don't want to waste their time on small opportunities, so your business must be geared to grow to be a market leader in a short period of time.
Angel investors and venture capitalists also want a clear exit strategy, so your business needs to be designed so it can go public or be sold to another company within 2 to 3 years.
Angels and venture capitalists invest in their areas of expertise and focus on a particular stage of the business (seed capital, early stage, etc.). Networking to find the right fit is essential.
Some corporations can also act as angel investors if your product or service is adding significantly to their business. However many times they want full control, so they buy your company rather than investing in it.
In 2006, 51,000 ventures received an average of $500,000 in angel investments. Their typical return for angel portfolios was 23% - but they may insist on higher rates to offset potential losses.
Health care received the highest investment (21%); followed by software and biotech (18% each). Retail received 8% and Financial/Business Products and Industrial/Energy each received 6%. Source: Center for Venture Research
Read this BEFORE you start looking for an angel:
Angel Capital Association has this free venture capital workbook
Raising Equity Learning Center
You can also find information and view videos about the equity market, creating a pitch and doing a deal at the Raising Equity Learning Center. Click here for more information
Videos and templates from the Wisconsin Angel Network
The Wisconsin Angel Network has developed videos and a presentation template to help people get venture funding.
15 minute presentation template to use with angel investors
Video on how to market yourself to angel investors
The National Venture Capital Association provides sample documents for a venture capital agreement. These documents try to fair, eliminating bias or hidden legal traps that might benefit the experienced venture capitalist. You should compare any documents that you have with this "best practices" agreement. Click here to go to the Model Venture Capital