Angel Investors

Some of the most important individuals a small business can use to improve are angel investors.  According to author Jacoline Loewen, angel investors “fill the gap in seed funding between ‘friends and family.’” Angel investors typically use their own money to fund businesses, therefore expect high returns to their investments.  Two of the best angel investors today are Reid Hoffman and Ron Conway.

Reid Hoffman was born in Palo Alto, California in 1967.  In 1990, Reid graduated from Stanford University with a Bachelors in Symbolic Systems and Cognitive Science.  Reid then, in 1993, earned his Masters in Philosophy from Wolfson College, Oxford University.  His first company, SocialNet.com, opened in 1997, which focused on matchmaking people with similar interests, as well as dating.  He was also a member of Paypal’s founding board of directors.  In fact, Reid left his company to become Paypal’s COO in 2000.  His biggest invention was the website LinkedIn. His investment portfolio includes Flickr, Last.fm, Facebook and Zynga.

On inc.com, Reid gave five tips to “ace your investor pitch”:

1.     Prove your business

2.     Show one revenue stream

3.     Sidle up to another successful company

4.     Expose your risks early

5.     Every investor is not the right investor.

These tips are key because if you do not highlight your business or risks before an investor jumps on board, then it leads to investors either not agreeing to help the business or pulling out because the risk becomes too much to handle.

Ron Conway was born in San Francisco in 1951.  Ron graduated with a Bachelors in Political Science from San Jose State University.  Ron, according to Miller Gold Partners, “sees practically every startup deal and has used that power to his advantage, investing in many of the most important startups of the past decade, including Google, PayPal, Facebook, and Twitter.”

Techcrunch.com writer Kyle Russell did an interview with Ron, in which he gave the following tips to young business founders finding investors:

1.     “Idea has to be infectious enough to find a co-founder.”

2.     Background is not the motivating factor: it is the circumstances that led to the startup’s creation.

3.     Recognize and adapt to a product not finding a market.

These tips are critical because a business owner needs to be both comfortable with their co-workers and what the business as a whole is about.  If the owner does not follow the market their product is for, it could potentially lead to a loss of business, which is a huge risk in the eyes of investors.

For my business plan, I really relate to proving the business, exposing the risks, and recognizing and adapting to a product not finding a market.  Since my business is focuses on making videos and putting them on Youtube, I first need to find the market I want to watch my videos.  Once I recognize the market, I can adjust my business accordingly.  Proving the business is going to be the most important tip to follow.  The market for Youtube videos based on video games is already crowded, so I need to find a way to distinguishing this company from the rest.  I also need to prove that my company is better than the already established companies.