Ways to Raise Money for your Start-Up: Angel Funding

Angel funding is one of the more common ways to raise money for a start-up. An angel investor typically is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. Additionally an increasing number of angel investors organize themselves into angel groups to share, research and pool investment capital. Angels typically invest their own funds, unlike venture capitalists, who manage the pooled money of others in a professionally-managed fund. Although typically reflecting the investment judgment of an individual, the actual entity that provides the funding may be a trust, business, limited liability company, investment fund, etc. The amount of active angel investors in America continues to grow, with the Small Business Administration estimating that there are now over 250,000 active angel investors in the US, and that they provide funding for about 30,000 companies per year.

The following is a short list of steps an entrepreneur should take before approaching an angel investor.