Find your angel(s)

According to the University of NH’s Center for Venture Research, there are about 250,000 “angel investors” (wealthy individuals who invest in small private companies) in the US. They invested $24 billion in about 50,000 companies in 2006, more than all venture capital firms combined ($22 billion).

That’s kind of mind-boggling, isn’t it?

Or maybe not when you see all the new Astons and Bentleys rolling around town… Just one of those babies could cover your payroll for six months and get you to break-even. Surely an investment in your gem of a company is better than one in a sleek but rapidly-depreciating British motorcar?

This torrent of angel money may actually increase due to some tax incentives working their way through Congress this year. On top of this, angel groups are getting more organized (better information sharing, adoption of best practices, match-making with entrepreneurs, etc).

Most angel money goes towards tech deals but there’s now more available for companies in other sectors as the pie gets bigger and the composition of angels gets more diverse. As it happens, many angels have a soft-spot for branded consumer companies.

This is all great news for entrepreneurs who need external funding to lift off (most of them). Angels can be an excellent source of early-stage funding and talent (if the process is set up right; more on ways to improve this dynamic in another post). The important thing is to find the right match for your company.

Start scouting around early to find your angel(s). Talk to fellow entrepreneurs, attorneys, accountants and your local angel group (the Angel Capital Association is a good place to start). You should count on at least 6-12 months, assuming you have a compelling investment proposition and can present it well.