Equity financing is usually far more expensive than debt capital. It is imperative that you work with a properly qualified attorney when you are looking for angel investors for equity financing. Angel investors typically invest $ 250,000 to $ 1,000,000 in each project. Angel investors may provide both equity and debt financing. We shall recommend that you consult with all of your financial advisors before seeking any type of angel investment, venture capital investment, or that capital from a bank. Bankers typically have a tremendous number of contacts as it relates to private investors or other private funding sources.
Financial modeling is an important part of your business as it relates to obtaining either equity financing or debt financing. The return on assets is an extremely important part of a well written business plan specifically for a private funding source.
If you are having trouble finding angel investors you may want to work with a capital syndication firm. Group investing lowers the risks associated with putting money into a new venture. This is an essential part of the capital raising process if you are seeking a large amount of capital. Angel investors often work in groups. Equity will almost always be required as a negotiating tool. A power point presentation should be provided to any interested party or parties that want to be a part of your syndicated investment. For large deals, you may want to seek a syndicated group of investors.
Angel investors nor banks do not like risk. Individual investors typically have a number of different financial needs. Angel investors typically are able to make their investment decisions quickly than a venture capital firm. Your CPA can assist you with calculating the anticipated ROI for your business as your investor is going to want see this documentation if you are looking for equity capital.
Debt capital from the SBA is less expensive then equity capital. You should always look first to the SBA for funding prior to seeking equity funding. When you’re putting together your pro forma financial model, you should communicate the valuation of the business on a year-to-year basis.
Prior seeking any type of financing, you become very well educated as to how the process works. Bootstrapping is a very good way to avoid having to work with an angel investor. Proforma financials are imperative to showcase to your angel investors. Angel investors do not usually provide loans. Prior to looking for angel investors, you should look at programs offered by the Small Business Administration.