How to find angel investors, obtain funding

Angel investors, individuals willing to put money into young businesses and, sometimes, startups, can be hard to find.

Even if you discover a group of angels who invest in your type of business, making it through the application and screening process to the presentation that will determine whether your business obtains funding is even tougher.

Here, then, is some help, condensed from conversations with Jeff Carter and Ron Kirschner, founders, respectively, of Hyde Park Angels, Chicago, and Heartland Angels Inc., Skokie.

Heartland, founded in 2003, has 30 members — or people willing to risk some of their own dollars in a promising small business. HPA was founded in 2007 and has 90 members.

Start your funding quest by visiting, and studying, their websites: hydeparkangels.com and heartlandangels.com.

You'll learn what types of companies each group prefers; investment criteria; and what additional support might be available. Both, for example, provide access to a mixture of mentors and consultants.

You can apply for funding through either website, but be certain you match the group's interests and meet its qualifications. On the Hyde Park site, the profiles of companies that have obtained funding are a must-read.

Now for what's not on either website: Comments and advice from Kirschner and Carter.

Ÿ Jeff Carter, Hyde Park Angels. “Look at the businesses we've invested in. They virtually all piggyback on the strengths of the Chicago economic system — such as consumer products, risk management, travel.

“We look for businesses that are rapidly scalable. We want the business to grow and be acquired. We look at a 12-18 month run rate.

“(Our members) will take an equity position, although not too much. The entrepreneur needs a stake, (but) we make them think about an exit strategy.

“When you present, you're not only selling your company but you're selling yourself. We're betting on the management team. Present the solution your company offers in the first two minutes.”

Ÿ Ron Kirschner, Heartland Angels. “We look for technology that the entrepreneur truly owns. We like to see exclusive licenses, trade secrets.

“Presenters don't have to be the best in the world as managers, but they must be educable.

We can create a management team, but there should be at least one person on the presenter's team who understands business and has some sense of what they don't know.

“In our due diligence, the company must have a full-blown business plan with real financials.

“We look for some way that the business can get early cash, so they don't become dependent on debt financing. A technology firm's first sales (often) will be to CTOs (chief technology officers), for example.

“Advice? Develop an advisory board, people with operational, marketing and financial skills who understand the business.”

Ÿ Contact Jim Kendall at JKendall @121MarketingResources.com.