Capital is key to any businesses growth, and we know getting capital can be difficult. One angle you should be researching is finding an angel investor to infuse cash into the growth of your business.
To find out how and where to get angel funding I visited 1871, the Chicago-based collaborative workspace located in the Merchandise Mart. It's a place for entrepreneurs to build their companies and share ideas in an open work environment with other small startups.
I sat down with Troy Henikoff, co-founder and CEO of Excelerate, to discuss how and where business owners should go to find angles that can invest in their company. Excelerate is an incubator that helps small start-ups get off the ground -- making Troy the perfect person provide some guidance.
First, what is the difference between a fund and an angel investor?
Troy Henikoff: An angel investor is an individual making a decision about how to invest his or her money. By definition, once you have a fund, you have a fiduciary duty to invest other people’s money wisely to create a return. If I am investing my own money, it’s my money, I can invest in whoever I want because I don’t have a fiduciary responsibility to anyone else.
How do you determine what kind of business you would invest in?
Troy Henikoff: I’ll only invest in something I feel like I can add value to and that I know something about. I need to understand the business and feel like I can really be a valuable addition to that process -- usually at a high level. I can bet on a company that is a good company, or I can bet on a company that I can add value.
Why do angels invest?
Troy Henikoff: A couple of the companies I’ve invested in specifically because I believe in the entrepreneur and I believe with some help we can get somewhere great. Other companies I’ve invested in, we literally spend two hours a week together. I do it, not because he necessarily needs my helps, [but] because I love doing it. I get exposed to what’s going on, I get to roll up my sleeves and get dirt under my nails. I think I’m helping. Plus, he’s just a great guy to work with.
What information should you compile before approaching an angel investor?
Troy Henikoff: The first mistake people make is to think you should approach someone and ask for money. There is an adage: If you ask for money you are going to get advice, if you ask for advice you might get money. The second thing is that these are relationships. Nobody really goes in and asks for money and walks out with a check. What really happens is that they go in and they build a relationship over time. This could be over a couple of months, sometimes it’s a couple of years, and after the investor gets to know the individual, the company, and gets comfortable with it all they are ready to make that investment.
Where do I go to find angels to start building this relationship?
Troy Henikoff: The interesting thing is that people that are active in this field are happy to take meetings with budding entrepreneurs because they want to see the opportunities early. Often times they will have office hours where you can go in and meet with these individuals for thirty minutes and get to know them. In Chicago there is an event almost every night where angels are networking.
Visit BuiltInChicago.org as a place to find several events. Here at 1871, there are 50,000 square feet of entrepreneurs, several of the venture funds and angels have an office here, and there are events here almost every single night.
Jabez LeBret is the author of the Amazon No. 1 bestselling law office marketing book How to Turn Clicks Into Clients. As a partner at Get Noticed Get Found, a legal marketing agency, over the last nine years he has delivered over 800 keynote addresses in six countries. His main area of expertise is managing Gen Y in the workplace, advanced Facebook strategies, LinkedIn strategies, Google+, SEO, local directory optimization, and online marketing.