Q: Is an angel investor the best avenue for my business, and if so, how can we secure one?
Gary Spivak, founder
FidelityDating
A: Accessing capital is one of the central problems all ventures face, but without knowing a lot more about your business, I can't answer your first question. However, I can lay out the options available to all entrepreneurs.
The first option is self-funding. Self-funding through savings, outside income, personal loans, credit cards and earnings from the business has a lot of advantages; plus, for most of us, it is the only way to get started. Self-funding allows you to maintain total control. The downside is that you bear all the risk.
The second option is raising money from friends and family. You have an advantage here, since your friends and family already know you and presumably trust you. The downside is that it involves your friends and family in your business and provides them standing to comment on and question how you run your business. It also puts their money at risk.
The third option is angel investors. Angel investors are high net-worth individuals who invest their own money in new ventures. Some angels dabble, occasionally reviewing a venture and infrequently investing, and some are very active. They invest anywhere from as little as $10,000 to as much as several million dollars.
The advantage with angels is that they often bring more than just money — they bring experience, valuable knowledge and network connections. The downside is that they may become overly involved, very controlling and might require an exit. The business will have to be sold in order to return their investment. So, before taking their money, make sure you are building to sell.
