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Many new companies reach a point where a significant influx of money is necessary to take the business to the next level. Perhaps you need money upfront to fulfill a large order for inventory; maybe you need a complex new website to accommodate growing e-commerce for your product. One way to obtain the money you need is to pursue angel investors.

Before you do, however, it's a good idea to understand what you're getting into. First, understand that angel investors - despite their name - are not acting strictly out of the goodness of their hearts. They expect a significant return on their investment - much greater than they can find with more conservative investment options (your young company is a much riskier endeavor, after all). You also need to prepare yourself for what comes with the money - namely, input. Your angel investors, who are essentially part owners, will often want to share their opinions and recommend strategies. If you became an entrepreneur strictly to avoid answering to others, obtaining your funding through outside investors may not be the right option for you.

If you're prepared for that, though, the first key to finding angel investors is to talk to people. A strategy I often go back to is this: "The best way to get money is to ask for advice. The best way to get advice is to ask for money." So do whatever you can to expand your circle of advisors - many times they will become your investors, too!

So where exactly can you find potential angels? Here are some common sources:

1. Family and friends
2. Local community contacts -- "friends of friends"
3. People who share a social or demographic profile, such as "women" or "minority" investors, or people who share a similar concern for something (e.g., the environment)
4. People you admire, or know to be in the same or similar industry sector
5. Organized groups of angel investors (e.g. www.goldenseeds.com and www.keiretsuforum.com)

Tagged as: Business Advice, business investment, finances, startup advice, startup financing