Angel investors can be either wealthy individuals or a group of people that provide start-up capital in exchange for equity in yourcompany. Although the requirements vary widely, there are three fundamentals that most angels require before they will invest:
- You have exhausted your personal sources of funds (from yourself, your friends and your family) — they want to see that you have skin in the game.
- You have a convincing story that there is a need in the market that you can solve.
- Your business has the ability to generate a 10X return on their money within five years (because investments at the early stage of a company’s life are the most risky).
Typically angels fund small amounts (ranging from a few thousand dollars to upwards of $500,000).
The most organized angel group in the state is the Angel Capital Group, which has offices in Knoxville, Nashville, and Memphis. There are also many individual angel investors that are networked into our entrepreneurial community. Our faculty are willing to discuss and evaluate your ideas, and then help you get networked to individuals who might have interest.
The Angel Capital Association has a lot of good information on their website for learning more about angel investing.