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.
US Investor Network, Inc.
PO Box 6344
Raleigh, NC 27628
Investment clubs have emerged as a popular method for individual investors to pool resources for investment purposes. Clubs are structured with different investment strategies and requirements depending on the members’ goals. Although most clubs tend to invest in large, well-known companies, some clubs look to diversify their portfolio with investments in promising local businesses. These clubs will accept greater risk in a modern portion of their portfolio in hope of achieving a superior return on their investment. Tri-State Investment Group and Fairview Capital are examples of groups that once functioned as informal investment clubs. Contact information on local chapters within North Carolina is available through the National Association of Investors Corporation.
National Association of Investors Corporation
PO Box 220
Royal Oak, ME 48068
(877) 275-6242 (toll-free)
Computer-based networks try to match those looking to raise capital with potential investors. These services simply match the needs and interests of the two groups. The networks usually charge fees to both parties for generating the match and are designed only to facilitate the introduction of like-minded parties. The party seeking to raise capital still must convince the financier of the values of the investment. Networks usually focus on a particular state or region, and although there are regional networks that include the Southeast, there are currently no traditional networks dedicated to North Carolina. Many of the potential networks available may be found through other helpful Internet sites. The sites include a wider variety of information, including glossaries, current news stories, and links to other sties, while networks have the specific goal of connecting investors with investments.
Technology Capital Network at MIT
Subscription fee: $300 one-time fee
Area served: Maine to North Carolina
The Capital Network
Subscription fee: $750 for a six-month listing
Area served: National
Angel Capital Electronic Network (ACE-Net)
ACE-Net is an Internet-based listing service sponsored by the US Small Business Administration. It provides information to angel investors on promising small businesses seeking to raise $250,000 to $5 million in equity financing. ACE-Net permits enrolled investors to anonymously view, via the Internet, executive summaries and additional information provided by participating entrepreneurs. When an investor sees a deal of interest, the investor contacts the entrepreneur directly. Both entrepreneurs and investors enroll in ACE-Net through a regional Network Operator; additional subscription information is available via the Internet at http://acenet.csusb.edu/.
US Investor Network, Inc.
The US Investor Network is the ACE-Net network operator for the state of North Carolina. It was founded in 1995 and serves entrepreneurs by providing education and contacts to investors. There are four membership levels offering a variety of services. The first membership level is free, while the other levels offer more programs and cost from $25 to $450 per year. More information is available at www.usinvestor.com.