Angel Investors, The Economy, and Other Capital Raising Issues

Always start a negotiation with offering minimal equity as it relates to working with angel investors or any other type of providing funding source. In this discussion, we are going to touch on a number of different subjects as it relates to raising capital as well as ensuring that the business venture that you are launching will remain profitable and cash flow positive in any economic climate. It is very important to take into account the state of the economy and the industry that you are entering as it relates to your business. In your business plan, you should always provide a complete analysis of the economy in its current state as it is imperative to understand whether or not your business will thrive in any economic climate. There are a number of economic analysis firms that can assist you with providing an understanding of the economy and whether or not you should start your planned business. Some entrepreneurs start businesses with the intention to sell them from the beginning of their operations. As such, if you fall into this category, then you must create a business plan that clearly showcases how you intend to start the business and sell it after a predetermined period of time. This is especially important if you intend to raise capital from a private source, such as an angel investor, as this will be extremely important to them when they are reviewing your business plan, private placement memorandum, or business prospectus. Some angel investors specialize in real estate transactions which may allow you to acquire owner-occupied properties. However, if you are only seeking capital for this type of transactions then it may be in your best interest to find bank financing for a real estate acquisition. If you are actively involved with the buying and selling of real estate then it may be in your best interest to not work with a private investor as you will need to pay them a substantial return for a relatively simple business transaction. Finally, when you are seeking private capital should create lists of prospective investors that would take a look at your business plan or your business prospectus. You should only seek outside capital if it is absolutely necessary in order to grow work spend your business as this is an extremely expensive but low risk form of financing. Debt capital almost always requires a guarantee, whereas investment capital does not in most instances depending on the funding source that you are working with as it relates to staring or expanding your business.