Angel investors are individuals who invest in high risk, early stage ventures by reserving a portion of their total investment portfolios to provide emerging companies with startup capital through direct, private investments. Their goal is to stimulate business and the economic climate as well as achieve higher returns than the typical public markets provide. Most angels are active investors – who contribute their time and experience, as well as offer introductions to valuable contacts essential to the company’s success.

Is angel funding right for your company? You should produce a comprehensive business plan that articulates your key business strategies for how you will grow your venture. This plan should contain the following information:

MARKET: A thorough market analysis demonstrating:

• An identifiable market segment with market potential of at least $100 million
• A significant demand for your proposed solution
• Large and growing projected spending in your product category
• A plan to achieve widespread market penetration for your products and services as efficiently as possible
• Discussion about your company’s use of either an internal, direct sales team or external channel partners

COMPETITION: Produce information on the marketplace including:

• An analysis of potential competitors including your company’s differentiation points and barriers to entry
• A proven concept behind your product or technology confirmed with data or by objective experts
• Protected intellectual property, along with an exhaustive search to be sure that you are not infringing on patents or trademarks held by others

MANAGEMENT: Demonstrate:

• A management team with experience (preferably in your opportunity’s industry) and a willingness to be coached
• An understanding that a secession of some control and decision-making authority to outside investors may be required

FINANCIALS: You must:

• Show reasonable financial projections (including an income statement, cash flow and balance sheet and supporting spreadsheets) based on logical, realistic assumptions
• Lay out a pathway to achieve high margins (+15%) and consistent cash flow growth
• Outline a funding requirement between $50,000 to $500,000 to finance growth activities, including product development, recruiting key staff, launching sales and marketing activity
• Propose a clear exit strategy that will enable angel investors to generate a return of at least ten times their initial investment.