Are there angel investor lists that are free?

Yes, fortunately there are numerous free angel investor lists, many of which can be found with a quick search on the internet.  One in particular is www.Invstor.com.  The Invstor.com Network exists to connect entrepreneurs, job seekers, advisors, investors, and everyone else in the startup community.  At Invstor.com you can search for specific angel investors based on their preferred size of investment, the geographic areas they serve, and their preferred industries to invest in.  You can then contact them directly through the Invstor.com system. 

Alternately you can post a “Request” on the system (like a classified ad in your newspaper) indicating what type of investment you are looking for.  Investors browse these ads when they are searching for deals. 

At the very least you should create a quick profile of your company which will allow you to indicate that you are looking for funding (it’s free and it only takes a minute).  This way if investors are looking through profiles of companies they can see what you’re looking for.

Where else can I find angel investors?

If you are looking for a source of angel investors offline, you can try several paths.  Perhaps the most reliable way to find an angel is through your current network of contacts.  You may not know any angels, but someone you know may be able to refer you to one.  Keep in mind that deals are formed on trust, and the farther you get from people you know directly, the more unknown you will be to that investor, which lowers the likelihood of getting a deal done.  Cold calling is neither effective nor enjoyable for the investor or you.  Thus expanding your network of contacts and meeting people whenever possible is crucial if you need more leads.

 Another potential method of finding angel investors is through faculty in university business departments.  Many professors know local potential investors and with some convincing, they may refer you to them.

How do I persuade angel investors to choose my business?

Most deals seen by angel investors are rejected.  In order be successful, you must be certain to address the following crucial areas in your presentation to any investor.  First, the business must have the potential to provide them with a good return on their money.  If you are able to convince them of this, the hardest work will be finished.  Beware that inflating your financial projections is NOT the way to accomplish this.  You must have a comprehensive plan describing how you will go from startup to a specific profit point.   

Feed Their Desire to Invest

The motivation of an investor can prove to be very important in their decision to invest.  Some investors want the experience of being involved in a startup again.  These will probably want to be involved in the daily operation of the company.  Others invest purely for the potential returns.  And still other angels have some combination of those or other reasons.  You should tailor your approach to them by discovering their motivation for investing.  If you want to make unilateral decisions and the investor wants to be heavily involved, you may need to adjust your expectations or reconsider accepting his investment.  

1.    Have a Good Management Team

Angels will also want to see a solid management team.  This is perhaps the most crucial factor in the success of a startup, and since many angels were successful entrepreneurs they realize its importance.  They are essentially investing in people, and the angel must be convinced that the company is placed under the responsibility of competent, trustworthy businessmen.  The investors must see that you are willing to hire people to supplement your weaknesses.

2. Plan a Solid Exit Strategy

A planned exit strategy suitable to your business will also help to convince angels to fund your company.  They should realize that it is a very risky investment, but the potential returns are very high.

3. Create a Viable Business Plan

Your business plan needs to clearly delineate to an investor what your business solves and how it makes money.  The overall vision as well as the details of how that vision will be achieved should be described thoroughly. 

4. Decide What Type of Equity Will Be Offered

The sophistication of a potential investor may determine what type of equity they are seeking.  Potential future financing rounds must be taken into consideration.  Many venture capital deals use convertible preferred stock, and an angel investor will probably want to hedge his risk by taking preferred as well.  If you can negotiate common stock, then go ahead and do so.

5. Define Roles Clearly

Sources: http://sbinfocanada.about.com/od/financing/a/angelinvestor.htm