Playing an Angel
Networking Your Way Into (Investment) Heaven
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These are the kinds of steps Tori Stuart took when she looked
for angels to fund Zoe Foods, her Newton, Massachusetts, natural
foods company. She networked with everyone, getting the buzz out on
the street about Zoe Flax & Soy Granola, her natural remedy for
the symptoms of menopause. It also helped to have a product that
already had enthusiastic customers supporting it. "The
challenge in raising money is communicating [about our company and
product] because we're in the natural foods sector," says
Stuart, 36. "[Not all] investors are natural foods
consumers." Getting them to believe in a product they
weren't familiar with presented its own set of unique
challenges. But starting to network early--and forging connections long
before she even needed capital--is ultimately what helped Stuart
and her management team raise $1.2 million even at the height of
2001's economic difficulties. "Start months before you
need to," says Stuart. "And to some extent, you have to
put the economy out of your mind." So the bottom line in the angel funding arena these days is
simple--it's tougher to get capital, yes, but there is still
money to be had out there. "Angels by nature tend to be
optimistic," says Simmons, "but they just want more
assurances today than they did a few years ago. That's OK--I
think [it] helps everybody. But there are still plenty of angels
out there looking for deals to invest in. So entrepreneurs who do
their homework and prepare--they can get financed." | Coming soon | | Content Continues Below
We asked these authors what they feel
the state of angel financing is right now and where they see it
moving by the end of 2002. - "Uncertainty. There's a lot of talk about valuations
being down and now being a great time to make investments. I think
intellectually, that's what most people feel. Emotionally,
it's very hard to pull the trigger. [So entrepreneurs] continue
to be really frustrated that angels are willing to talk and look at
deals and presentations, but it's very hard to get them to
write a check. I think it's improving, but it's a slow
trickle. It's not a flood of people racing back into the
market."
-Cal Simmons, co-author of Every Business
Needs an Angel - "It's gone back to where it was before the period of
excess in the late 1990s and 2000, when we all got swept up in
venture capital and angels. I think we're sadder but wiser,
having gone through the last couple years, so I see it [going] back
to a more growing-businesses stage [rather] than a
financial-engineering stage."
-John May, co-author of Every Business
Needs an Angel - "I think it's one of the best times to be an angel
investor and an entrepreneur, which might be contrary to what
[some] people think. The quality of the companies looking for
capital has improved. There are fewer companies, but they're
better companies."
-Dee Power, co-author of Attracting
Capital From Angels
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Originally published in the May 2002 issue of Entrepreneur Magazine
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