New Businesses and Angel Investment

A new business depends primarily on the management skills of the entrepreneur. The most successful entrepreneurs manage their resources by minimizing the amount of capital needed to start and grow their business. Angel investors want all of their investment put directly into making the business grow in order to insure a high rate of return, which should be about 20% to 30% per year on the invested amount. It is often a mistake among entrepreneurs to think that there are no competitors that operate in a similar capacity to their business, and this should be shown in your business prospectus as it relates to starting a company with money from an angel investor. Equity will almost always be required as a negotiating tool as it relates to working with a private third party funding source.

The details of how you will accomplish the goals of your business are described in your business overview documents. Entrepreneurs often have the misconception that a new business idea must be unique in order to be financed by an angel investor. However, this is usually not the case as the most important thing about your business is that it is economically viable. An expanded executive summary can be used to attract the attention of potential investors, and this should be shown within your new business plan.

Angel investors usually ask for less equity than a venture capital firm due to the fact that they require less capital and are less risky. We always recommend that you work closely with a CPA when you’re going through the very complex capital raising process. If it is investors you seek, do what you can to make the opportunity you present to them as attractive as possible. You may wan to find discussion groups for additional advice and support on business plan writing.

The ROI of your business should be more than 20% per year as it relates to working with a professional investor or individual funding source. An organizational business plan will be organized in a similar fashion as any other business plan as it relates to working with these individuals.

Writing a good business plan is one of the most important parts of raising capital as this will put all of your ideas for a business in a document that you can use to raise capital while also providing you with a guideline for how to expand your business. If you are uncertain as to how to put together a business plan specific for an angel investor or venture capital firm then you need to work closely with an appropriate adviser in order to accomplish this goal.