It is well-known that most major companies have utilized investors at some point in their history, and it is not uncommon for investors to remain a critical piece of the continued success of businesses such as Google. In Google’s case, investors and stockholders are a viable way to gather quick funding for each of their new projects.
However, smaller companies and start ups often need to turn to investors to help them take their ideas from the planning stage into an actual product or service. Without investors, many of the most useful technological products in history probably would not exist. In other words, people who invest in technology have the opportunity to help shape the future.
Which Investor Makes the Most Sense for My Project?
There are many different ways to get funding for a project, but the two most common options that do not involve a financial institution are angel investors and personal investors. Businesses can also utilize peer-to-peer lending in some situations, and established companies with a proven ability to bring in millions of dollars can turn to venture capitalists. For most tech start ups, it will be necessary to stick with personal or angel investors.
What is the Difference Between Personal and Angel Investors?
A personal investor is a friend or family member who is willing to give you money to get your start up off the ground. This typically requires a contract with an agreed upon repayment plan, including an interest rate that will enable the investor to make a profit. You could also structure this agreement to provide the investor with a certain percentage of your profits instead.
Angel investors such as John Rampton and Murray Newlands seek out intriguing new tech start ups that have a good pitch but are having difficulty raising enough money to launch their service or product. In many cases, these investors will contribute a significant sum of money to make sure the business gets off on the right foot. Rampton has served as an angel investor for four tech start ups to date, and he typically provides $35,000 for each investment. In return, angel investors may ask for partial ownership or a specific percentage return on their financial contribution.
How Do You Attract Angel Investors for Your Venture?
According to Newlands, angel investors look for five key components before making a decision: large market size, uniqueness, an effective business model, excellent financial performance and a verifiable history of experience and background within your chosen industry. If you have all of these components along with a good idea, it will be much easier to attract the attention of an investor who will help you launch your start up. Even if this will be your first start up venture, you might still be able to acquire an angel investor if your idea is exciting enough and you have done your due diligence.
Bringing an investor into your project is a good way to quickly increase your available funding, but keep in mind that you will be expected to provide quality results. In other words, you need to make sure that you have all of the wrinkles ironed out of your idea and are truly ready to move forward to the next stage of launching your tech start up.
After all, if you fail to fully commit to making your project work, it will be much more difficult to get another investor interested in your ideas in the future. However, with the right approach, you can give your current idea the best possible chance of success by harnessing the full potential of the money that has been provided by an investor.