Are you looking for an African American angel investor?

Entrepreneurial resources for African Americans can be difficult to find, but they are available.  Some African American entrepreneurs may feel more comfortable working with fellow African American angel investors.  Before we discuss how to find them, we will describe the angel investing process. 

How does angel investing usually occur?

An angel investor is a wealthy individual that usually invests between $10,000 and $500,000 per deal in a business, though a deal is sometimes even larger.  Typically angel investors are necessary in the early stages of the company, after family and friends have contributed but before institutional firms invest.  Banks are hesitant to make loans to companies with few paying customers, little revenue, and no proven track record.  Venture capital firms prefer companies with huge growth potential that have demonstrated on some scale that their business is viable.  Because of the lack of other options, angel investors using their own money come to the rescue of startup companies.

Debt financing vs. equity financing 

There are two basic ways to fund your startup: debt financing and equity financing.  Debt financing refers to a loan that includes a promise of repayment.  Equity financing are funds raised by selling a percentage of your company to investors.  If you are looking for a relatively small investment, you might be able to find an angel investor that would consider debt financing.  Your skill in negotiation will determine the terms of the deal.  Equity financing is the typical way angel investment is done.  Angels realize that in order to get the high returns they usually seek they need to own part of the company. 

Where can you find an African American angel investor? 

The most common method of finding an African American angel investor is through your personal network of contacts.  Make a list of local professionals you know that may be interested in your company.  Start asking them if they would be interesting in investing or if they could give you any referrals to other African American angel investors.  Family and friends may be able to provide referrals as well.

If you are not unable to find promising leads that way, try contacting your local chamber of commerce or trade associations.  Local accountants, bankers, and attorneys tend to know who has money also.  Keep in mind that finding an African American angel investor will take time and resources.  

How will an angel investor filter incoming deals?

Most angel investors, including African American angel investors, have more than enough deal flow.  In order to reduce it to a more manageable level, many automatically eliminate some business plans based on location, industry, and investment required.  Most angels realize that entrepreneurs need their advice and business contacts as much as money and each of these is more easily used in a business that is close to them geographically in an industry in which they are familiar. 

If you need more money than an angel investor usually provides, you may be able to form a syndicate of angel investors to raise the necessary funding.  Many times it is easier to recruit other angel investors once one has already committed.

How can The Invstor.com Network help? 

If you prefer to use the internet in your search for African American angel investors, The Invstor.com Network (www.Invstor.com) can help.  The network connects entrepreneurs, investors, advisors, job seekers, service providers, and any others in the startup community.

When you create a profile, investors can browse your information and contact you if interested.  It is free and easy to create. 

If you prefer to be more proactive in your search for African American angel investors, you can purchase a subscription.  With a subscription you gain access to the contact information for all Invstor.com members.  Using the search function, you are able to filter investors by region, preferred investment amount, type of investor, and industry.  Once you have selected the investors that fit your company the best, you can begin contacting them.

Alternatively, you can post a “Request” to a targeted group of investors.  A Request is similar to a classified advertisement.  When an angel investor is interested, he can contact you and begin discussions.