What NOT to Do with Angel Investors

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How Can I Avoid Common Pitfalls with Angel Investors?

What NOT to Do with Angel Investors

Angel investors are a force not to be reckoned with, so don't be fooled by the name. Here are a few mistakes you should avoid making to save yourself time and get the funding you need.

1. Don't under-prepare. You are asking for money for your company, so start at square one. By walking into a meeting with an angel without the proper paperwork to prove you are a good investment, you will get the door shut in your face. Bring a professional presentation, business plan, and financial documents to your meeting.

2. Don't look nationwide for an angel. If you keep your search local, you'll save yourself time and airfare. There are likely many qualified angel investors in your own backyard. If you can get them, referrals are the best way to find an angel.

3. Don't skip over the bad parts. Angels know there is risk involved in your company; otherwise you wouldn't be standing before them asking for money. If you don't warn your angel about the risks associated with your company, you could be out of compliance with your state's disclosure requirements, and you can upset an angel who later finds out you weren't up front with him.

4. Don't offer preferred stock. By offering your angel investor common stock, it puts him on equal footing with you, rather than having an advantage over you by owning preferred stock.



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