Can you get angel funding to expand your company? While angel funding is most
commonly used for startups, some investors do fund follow-on rounds of financing
for established companies, says Stephanie Hanbury-Brown, founder and managing
director of Golden
Seeds, an angel network focused on investing in woman-owned businesses.
"We would consider Purchase Order Financings and other types of deals depending on the company and the deal," explains Hanbury-Brown, who started Golden Seeds because she noticed that it's harder for female entrepreneurs to raise capital than males. She also had a long-term vision: "We need more companies owned and run by women so they can create an environment where women can get to the top and have sustainable careers at the top."
The companies Golden Seeds funds are typically founded by women who still hold C-level operating positions. Companies have usually received earlier funding but are valued at less than $5 million. Adds Hanbury-Brown, "They must have a scalable product, commercially viable business model and realistic exit strategy."
Enter:
Artemis Woman LLC, cofounded by Lisa P. Kable, 39, and Ann T. Buivid, 54. In 2002, the Wilton, Connecticut, company began producing women's personal-care beauty appliances, such as the Heel Smoother, for home use. After an early infusion of $350,000 from friends and family, the co-founders wanted to get their products into a mass-market retail environment--specifically, Wal-Mart.
A few years later, Kable and Buivid attended the Crossroads Venture Fair in Connecticut--one of the largest venture fairs on the East Coast--and presented their company to hundreds of investment professionals. Golden Seeds approached them at the fair and asked them to submit their business plan for formal review and to present at the group's angel meeting in New York City the following month.
Golden Seeds initially led a $669,000 investment in Artemis. When Kable and Buivid met with Wal-Mart--before an official purchase order was in hand--Golden Seeds led a $575,000 debt deal to finance inventory production.
When approaching angel investors, Kable suggests you:
- Start local and follow similar companies.
- Have a rock-solid pitch and a business plan to support it.
- Persevere.
"Raising money with angels is extremely time-consuming and exhausting, especially if it involves more than a few people writing big checks," Kable explains. "Angels want to meet the founder or CEO, so you can't delegate the meetings, and the process usually requires more than one meeting to close the deal."
But Kable is encouraged about the funding opportunities angels bring. With more people becoming angels and banding together in networks, she believes that angel money can be a viable source of expansion funding for the right company.
Aliza Sherman is a producer, entrepreneur and author of
Powertools for Women in Business as well as co-founder of
Motherhood
Later...Than Sooner. Links to her work can be found at
mediaegg.com.
Originally published in Entrepreneur's Women In Charge magazine 2008