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Often times, raising capital is a stumbling point for entrepreneurs starting a business. Sometimes personal funds just aren’t enough and venture capital can be tough to come by. Because of this, entrepreneurs often turn to angel investors. Angel investors are generally similar in practice; that is, most of them look for specific traits in the founder and business model that indicate whether the new firm has the potential to be successful.
Angel investors typically invest in the entrepreneur more so than they invest in the business. What does this mean? It means that angel investors carefully evaluate the character and personality of an entrepreneur who is asking for an investment. Investors are looking for a founder with drive and entrepreneurial spirit. Brian Cohen, an entrepreneur and author of What Every Angel Investor Wants You to Know, describes entrepreneurial spirit as “having the intuition [and] the faith… to overcome every obstacle to cultivate innovation and initiative.” Unlike venture capital firms, angel investors invest their own capital and thus have a tighter connection with the entrepreneur. Most, if not all of them will choose a great entrepreneur with a decent business idea over a decent entrepreneur with a great business idea. This is because they understand that a great entrepreneur will be able to make smart adjustments and have the drive and passion to make the business successful.
For some start-ups, international angel investors may be a viable option. Branching out from domestic investors provides entrepreneurs with a larger pool of investors that may present unique opportunities and different viewpoints on a particular business idea. In fact, an international investor may be of great assistance to an entrepreneur who wishes to expand his or her business abroad.
Angel investors, both domestic and international, are usually motivated by more than financial gains. These investors are typically successful entrepreneurs themselves and want to be engaged in the businesses that they are investing in. This is proven by the fact that a large percentage of angel investors actually lose money by funding startups. So money clearly is not the only motivational factor.
Any entrepreneur in need of seed capital should consider reaching out to angel investors. Obtaining funding is not as much of a stretch as you may think. In the first half of 2012 alone, angel investors in the United States funded 27,280 startups for a total of $9.2 billion. If seeking capital from angel investors, remember to convey your passion for your business and entrepreneurial spirit because this is ultimately what they are looking for.
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