Another reason angel investors are right for many growing companies is that they often add value to a business. Their experience and expertise can be priceless to those entrepreneurs who are learning the ropes as they go.
"We're definitely looking for the kind of investor who can provide some advice," says Cornelius. He believes his background in direct marketing and his partner's financial management experience provide an exceptional foundation for their business. But at the same time, he says, "You tend to get so involved in your business, you don't see what good, interested advisors can see right away."
After a bank lends you money, for better or for worse, it usually stays out of your way. Angel investors, on the other hand, are often tough-as-nails men and women who got rich by growing successful businesses and then either selling them or structuring them in such a way that the businesses no longer need their full-time attention.
Other angels are actually downsized executives with big wads of cash from severance packages. Getting money from these investors can work great--if they can make the transition from a professionally managed to an entrepreneurially managed (read: chaotic) organization. Still other angels are professionals, such as accountants and lawyers, who want to invest in a business but are also looking to develop new clients. It's important to decipher what additional goals angels have so you can take advantage of the benefits they offer beyond investment capital.