Good News for Technology-Oriented Start-Ups: Wall Street Journal Estimates that 30% of Angel Money Raised Is for Tech Sector Ventures

A recent article on "angel investors" in the Wall Street Journal cited investments of $11 billion in Q1 and Q2 of 2005. Of this $11 billion, approximately $3.3 billion went toward funding software and technology start-ups.

The importance of angel money in many start-up situations is significant: even if you raise $200,000 instead of $2,000,000 — it may be the funding which allows you to bring your product to market, or which funds salaries while you are in the client acquisition phase. The Center for Venture Research in Durham, NH specializes in analyzing venture funding. Venture or "angel" funders are often successful entrepreneurs who evaluate multiple opportunities and select several start-ups to back — anticipating that some of them will fail, and others will provide a substantial payoff, negating losses from the unsuccessful businesses.

There are some key steps in getting funded: first, if it is possible to prove your concept before seeking funding — showing prospective investors that there is, indeed, a market for your goods or services, you will find investors more receptive to your message.

Second, be sure to develop a range of materials describing your project: from detailed business plans which demonstrate that you have worked through a business plan from a to z, to executive summaries which are digestible over a business lunch.

Third, link in to resources designed to help bring together entrepreneurs and funders: many cities have organizations sponsored by local business schools, for example. In addition to getting you exposure to potential angels, you will be linked to a supportive peer group which can help you work through some common issues.

Fourth, think about team and track record when planning on your approach to potential investors. If you can partner with, or bring on board team members experienced in start-up environments angels may feel that there is a significantly better chance to see their investment pay off.

Finally, be willing to listen; not every investor will be willing to fund your venture — but every rejection, provided that you learn from it by listening to their perspective on your ideas, your presentation and your business plans — should get you one step closer to success.