How do you find an angel investor in California?

Perhaps the easiest way to find an angel investor in California is to find websites of angel investor directories.  Since angel investors strongly prefer to invest close to home, these directories usually separate the groups by their state. 

Do you live in California?

If you do not live in California, you should look for angel investors in your location before attempting to get funding from investors in California.  However do not let location be an insurmountable obstacle if that is your only option, especially if you have a company heavily focused on cutting edge technology.  

If you do live in California, you have several other ways to search for funding.  You can use local industry meetings, university professors, and chambers of commerce as starting points from which to meet new people and expand your network.

Regardless of your location, your personal contacts will probably be the best method of finding angel investors.  Most angels source their deals through a select few friends and are not prone to invite cold calls from entrepreneurs.  You will maximize your chances if you know an angel personal or know someone who knows an angel investor.  Be sure to ask a referrer if you can mention their name when you meet with an investor.  If you are more than two degrees of separation away from an angel, most of the benefit of your “personal” contact is lost since you will sound more like a cold caller.

The Invstor.com Network

Another source for finding a California angel investor is www.Invstor.com.  The Invstor.com Network connects angels, entrepreneurs, advisors, service providers, and anyone else in the startup community.  The network allows you to search for investors based on preferred location, amount of investment, and industry since most angels use these minimum criteria to filter out business plans.  With a subscription, you will also be able to obtain the contact information for all the investors.  Alternatively you can post a “Request” which broadcasts your business idea to angels on the network matching your investment criteria.  Another option, though passive, is to create a profile.  With a free membership you can create a profile containing your business details and other pertinent information.  This way any investors searching for potential deals through the profiles will be able to contact you.  Joining a Invstor.com group from California could be rewarding as well.

What should you look for in an angel investor? 

Most angels prefer to invest in an industry with which they are familiar or one in which they have had experience.  They are usually wealthy individuals that are accredited according to SEC standards.  That is, they have income of at least $200,000 (or joint income of $300,000) and a net worth larger than $1,000,000.

A typical angel investment is between $10,000 and $500,000 though it is occasionally larger than that.  Sometimes angels prefer to provide capital in a form similar to a loan.  In this regard they are much different than venture capitalists.  If you are attempting to raise $1-2 million, you may have more flexibility in the structure of a deal if you choose angel investment from a “superangel” or a collaboration of angels.  

How should you present your business to investors?

Angel investors, including those in California, will be looking for several things in any of their investments.  Many have a preferred method of communication, so discover it.  Some older investors like to do business primarily in person, or possibly by phone.  Others may think email is more convenient.  By communicating in a manner most convenient for them you will increase the chances of getting funded.  

If your company is more than an idea, an angel will want to see a solid management team with a proven track record of executing quickly and efficiently.  Be careful not to hire excess management in order to impress potential investors.  This top-heavy structure will do more harm than good in their eyes.

You must also show that you have thought of even the small details in the financial statements.  Most investors will not accept your numbers at face value because they know from experience that entrepreneurs severely overestimate the potential for the company.  Your pro formas should in essence be your marketing plan in the language of business. 

What should you be aware of in your talks with investors?

Be aware that some investors will not sign non-disclosure agreements or the equivalent documents.  It is beneficial if you can arrange it, but since many investors see too many businesses with similar ideas they will not sign.  Contacting an angel is difficult enough; closing the door to even more will hurt your chances of receiving funding. 

You should also be aware of the motivation of an angel.  Their motivation will determine how much daily involvement they prefer and the amount of decision making they require.  Both can cause significant problems in the future if left undiscovered in negotiations.