Angel investors provide seed money to business startups—to the tune of tens of thousands to a million dollars or more—in exchange for convertible debt or ownership equity.

• Some angel investors come together to form angel groups or angel networks.

Venture capitalists (or VCs) usually make their capital investments later in the business cycle. They exchange their investment and their expertise for a significant portion of the company’s ownership.

Before you approach an angel investor or VC, ask yourself these questions:

• Am I willing to give up some amount of ownership and control of my company?
• Can I demonstrate that my company is likely to realize significant revenues and earnings in the next 3-7 years?
• Can I demonstrate that my company will produce a significant return for investors?
• Am I willing to take the advice from investors and accept board of director decisions I may not always agree with?
• Do I have an exit plan for the company that may mean I’m not involved in 3-7 years?

Be sure to have a solid business plan and executive summary that includes:

• Financial overview for at least three years out.
• Sales and marketing plans.
• Three-to-five-year goals and your action steps to get there
• Exit strategy