"Angels"

The increasing role of wealthy private investors called "angels" provides an alternative to traditional venture capital. This, however, is a difficult source to locate since there is no directory or central source that identifies these people. Angels are usually passive members of the business community, and there is no extensive association or organization of these individuals. They are most often found through networking with other entrepreneurs or through members of the professional community such as accountants and lawyers.

In attempting to locate angels, the key is to start early. It will take time to locate an angel and considerable time for the potential investor to investigate your company. These individuals tend to invest in ventures close to home and in a business in which they have some expertise. Since angels will likely want to be involved in the business, the search should focus on individuals residing in the immediate vicinity of the company. Although angels will usually want to be active in managerial decisions, such financing generally does not require giving up the sizable ownership position and control that turning to venture capitalists may involve.