What are Angel Investors Looking for this Year?

If you’re looking for funding for your new business this year, you may look for angel investors or venture capital firms. 2011 was a particularly bad year for private investors like these but that doesn’t mean that they don’t have money to lend in 2012.

In fact, some of the larger, more established private funds make very few changes to their lending schedule based on economic conditions. There’s still a lot of money out there for you but what is attracting their attention? Venture capitalists and angel investors want to invest in the next hottest sector and that changes each year. What are they looking for this year?

No More of the Same

Angel investors and VCs don’t want any more ideas relating to social media, music sharing or other more of the same collaborative websites. Develop an idea that serves an otherwise unserved sector of the economy. How can the carpentry sector better use technology and what products could be developed to serve that otherwise low tech space?

Baby Boomers

As the baby boomers continue to age, look for ways to serve that sector. Tamiami Angels, an angel investing group in South Florida says that they are actively pursuing any technology that serves the aging population.

Ethnic Groups

The Tamiami Angels are also looking for new ways to serve the Latino market. As a firm located in South Florida they understand the underserved nature of this group. Are there certain populations in your area that are underserved? If there are, consider developing technology to address a need in that population.

Mergers

Angel investor Greg Hext says that his firm is looking for startups that merge with what he calls, old dirty businesses–technology that merges with shipyards, warehouse facilities, and others. These types of businesses have been resistant to new technology making them a large potential market.

How Hard is it?

It’s not going to be easy to get money but before you approach an angel investor, remember that your idea should be the type that grows rapidly and would be attractive to being bought out by another company. One investor says that if the business can’t grow ten-fold in five years, his firm wouldn’t be interested. Also remember that if you’re looking for investors, it involves giving up some control of the direction of the company. Investors are more worried about their money than they are the integrity of your idea.

Finally

If you’re just beginning to develop your idea, try to gear it towards an underserved sector of the economy. If you blend in, you stand very little chance of earning the funding you need.