Send Me an Angel...Investor A heavenly way to raise some cash for your business

(YoungBiz.com) - Sometimes, you've got the rightbusiness idea at the right time and in the right place--butyou're short on that one key ingredient: cash. That's canmake you feel like nothing short of a miracle will get yourbusiness off the ground.

Enter angel investors. That's exactly who helped to get acouple of awesome businesses off the ground for 'treps AbbeyFleck and Kristin Hrabar.

Angel investors are individuals or organizations that providefunding to get businesses through their start-up and initialdevelopment phases, often in exchange for a portion of ownership inthe businesses. As in Fleck and Hrabar's cases, angels may evenbe friends or family members.

Abbey Fleck of White Bear Lake, Minnesota, was just an average8-year-old kid--with a hot idea. One Saturday morning as shewatched her dad cook up some bacon in the microwave, she noticed itwas dripping in grease. There must be a better way, she thought toherself.

By the end of the day, she was pretty sure she had found it.Fleck drew a sketch of her idea and showed it to her dad. Aftersome trial and error, the two came up with the Makin Bacondish.

Big retailers like Kmart and Wal-Mart turned the Flecks away atfirst, but they struck up a deal with Armor bacon. Eventually theygot their original wish--a distribution agreement with a nationalchain store: Wal-Mart. But they would need a lot of cash to makethe 100,000 dishes Wal-Mart required.

That's where Fleck's grandfather, George Fleck, came in.He took out a loan on his farm to give Abbey and her dad the moneythey needed. A de F Inc., which Abbey co-owns with her dad, sellsaround 640,000 Makin Bacon dishes a year and brings in royalties ofmore than $1 million every year.

Kristin Hrabar, 16, of Aberdeen, New Jersey, was in the thirdgrade when she invented the illuminated nut driver, a special nutdriver with a clear shaft and a light mounted in the handle. Shespent the next couple years perfecting her idea and taking care ofbusiness legalities along the way, such as obtaining a patent and atrademark for her new company, LaserDriver Tools. Then it was timefor Hrabar to get down to business. To begin manufacturing herproduct, however, she needed cash.

Last winter, several angel investors in Hrabar's familydecided to help bring LaserDriver Tools to market. Several storesin Aberdeen now carry LaserDriver Tools, and a Web siteserves out-of-town customers.

A Piece of the Pie

Family members and friends who come forward as angel investorsusually have their own incentives for doing so: They want to seeyou succeed.

But what do other angel investors get out of it? That dependsupon the deal you strike. Angel investors expect to see theirinvestment significantly appreciate in value to the point when abank, venture capital fund or acquiring company will take over andhelp the company grow. As part of the agreement for lending youmoney, angel investors may:

• Ask to see detailed financial statements every few weeks orevery quarter.
• Require a seat on the board of directors.
• Hold you to a strict set of sales targets for the first coupleyears.
• Require shares of stock in the company.
• Want to be actively involved in company management.

Know going into the deal what you are willing to give up--andwhat you are not--in exchange for some cash flow to get yourbusiness up and running. And, whether your angel investor is afriend, relative or complete stranger, be sure to draw up anagreement with the help of an attorney.

The best place to find angels is within your current circle ofcontacts: family members, friends and professional associates.Other places to look are your chamber of commerce and your localbank.

Here are a few other organizations to help you get started:

• ACE-Net, a not-for-profit listing service developed bythe Small Business Administration, designed to facilitate the flowof information between BIZ Experiencess and investors.
• American Venture magazine provides insight and advice on angelinvestors. Contact them at (503) 221-9981 or www.avce.com for a $15,one-year subscription of four issues.
• Angel Money, www.angelmoney.com
• Internet Angels, (212) 333-8722, www.internetangels.com

For the BIZ Experiences willing to give up some equity and perhapsshare some decision-making, angel investors can provide anexcellent funding source for your company's development.