I owned my own businesses and consulted to other small business
owners I stayed away from angel, venture and private investors for
(1) They wanted too high a ROI
(2) They wanted too much control of the operation.
According to the Colorado Capital Alliance, surveys of such investors show that:
1. They are seeking companies with high growth potential, proven management and sufficient information about the company, its management team, and its market to be able to assess a company's value.
2. On average, they expect 10 to 15 percent above of the S&P 500 return on equity.
3. Typically, they invest in companies seeking between $50,000 and $1,000,000.
4. They generally prefer to finance manufacturing or product-oriented ventures, especially in the high-tech fields.
5. On average, they are 47 years old, have a postgraduate degree, and management experience in an entrepreneurial venture.
They may ask for at least ten to twenty times return in just five years. For many angel investors, it’s not just about the money; they want to actively participate in developing your business. They want to act as a mentor and sometimes even to take an active role in managing the company. This often translates into the angel investor having a seat on your Board of Directors.
They are also highly interested in an exit strategy for a full return on their investment in your business. The closest thing to it is an astute business plan that calls out the specifics of potential ROI, based on sound planning and analysis.