04/06/2014 01:003 Angles for Understanding Angels | Entrepreneur.com

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3 Angles for Understanding Angels

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Not everyone trying to raise funds for a new venture succeeds in scoring a check from Oprah.

But Judith Griffin is a determined woman with high expectations. She founded Pathways toCollege, which is based in Teaneck, N.J., in 1994 to help minority high school students across thecountry receive extra preparation and encouragement via after-school programs so they could beready for (and complete) college.

For-profit entrepreneurs can glean three key truths from Griffin’s nonprofit experience whenseeking funds from angel investors, individuals who invest their own money in a businessventure. An angel investor invests directly in a business -- not through a venture capital fund.

Related: A Step-by-Step Guide to Nabbing an Angel Round

1. Perform due diligence. An entrepreneur seeking money should study a potential investor'sportfolio: If that investor's portfolio includes a lot of similar businesses in a unique field differentfrom the suitor's, he or she should look elsewhere. Chances are the angel has expertise in aspecialized arena and won’t be likely to make a one-off investment in a different sort of venture.

Conversely, if a potential angel's investments have been in a particular field for which theentrepreneur's idea represents a bigger or better potential player, it's time to put together aproposal. Oprah Winfrey’s special arena involves youth programs and education, so Pathwaysmade for an excellent fit. “She is really very invested in youth education,” says Griffin of Winfrey.“She’s a wonderful role model.”

Related: The Art of Business Pitching Has Changed. Are You on Board?

2. Understand the power of passion and precision. Anyone who spends time with Griffin canbe inspired by her passion for making education a priority for inner-city youth. Her love for what

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Debra Kaye Follow Follow @DebraA_Kaye@DebraA_Kaye

she does and her deep knowledge of how education works are clearly evident as she speaks.These personal characteristics -- passion and knowledge -- are what angels look for in anindividual offering a product to invest in. So are honesty and sincerity.

A presentation to a potential investor should be thorough and detailed, and its narrative (the storytold about the entrepreneur's idea and its potential) should be chronological, coherent and logical.But also details about the entrepreneur do matter. Let passion show by conveying it in concert witha forthright presentation that anticipates challenging questions.

Related: Best Advice from Billionaire Investors for Entrepreneurs (Infographic)

3. Track the cycle. Twice Oprah Winfrey granted Griffin's program generous support. Each timethat support came with specific beginning and ending dates. Her expected return is not monetarybut measured instead by the number of students who participate in Pathways and their level ofsuccess. Angel investors will, however, expect to gain a financial return on their investment, willalso define the time limit of their support.

Few angels are looking for permanent relationships with entrepreneur partners. As a general rule,they are looking for a tenfold return on their capital in six years, so a presentation to angels shouldalways include a sound exit strategy. Show the angels how their investment goals will be met.

Approach angel investors demonstrating preparation, passion and promises fulfilled.

Related: Hungry Entrepreneurs Need True Grit to Get Their Next Meal

Debra Kaye is a brand and culture strategist and partner at Lucule, a New York-basedinnovation consulting firm. She is author of the book, Red Thread Thinking (McGraw-Hill,

2013). Follow Follow @rtthinking@rtthinking 1,889 followers

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