Loans, Grants and Equity Funding

Guide: Loans, Grants and Equity Funding Part Eight

Angel Investing

Angel investors give entrepreneurs wings. And by “wings,” we mean “funding.” But these investors don’t hand out free money – there are strings attached. Here’s what you need to know.

Angel investing basics

What is angel investing?

Angel investors provide seed money to high-potential businesses. These investments usually range from $5,000 to $100,000 but can be $1 million or more. But it’s not free money. It’s an investment in the company.

Angel investors get partial ownership in the business. Or, they might get convertible debt, which gives them the right to switch the debt into shares of company stock in the future. Many states also grant tax credits to angel investors.

Who are angel investors?

Individuals with high net worth are angel investors. But some get together to form angel groups or angel networks. This lets them share research about new businesses and pool their investment dollars.

Some angel investors have been entrepreneurs themselves. Some provide mentorship or get involved in business operations. It’s kind of like the show “Shark Tank” — personalities vary and so does how the investors want to be involved.

What are super angels?

This term refers to experienced angel investors who have a little more money to invest. Angel investors usually won’t invest more than $250,000, but venture capital firms generally won’t invest less than $1 million. Super angels can fill this gap. They can be individuals or groups like Collaboration Capital in Kansas City or iSelect in St. Louis.

So there are angel investors in the Midwest?

Yes. In Missouri, you’ll find angel investors primarily in Kansas City, Columbia and St. Louis. And Kansas has a tax credit designed to benefit angels. There are angel groups active around the Midwest.

Could an angel investor help my business?

Maybe! Read on – or call KCSourceLink at 816-235-6500. Our Network Navigators can help you find the resources that are right for you, your business and where you are right now. And all our services are free.

Who should work with an angel investor?

Partnering with an angel investor isn’t for every venture. And it has its pros and cons.

Financial support from an angel investor can increase your odds of business success. But it can also mean giving up some control. You may be held to a higher standard or an accelerated timeline.

Know yourself, your business and your funding stage. And do some soul searching before you approach an angel investor or network. You and your business partners need to answer these questions honestly:

Am I willing to give up some ownership and control of my business?

Can I show that my business is likely to realize significant revenues and earnings in the next three to seven years?

Can I show that the business will produce a significant return for investors?

Am I willing to take advice and direction from investors? Can I accept decisions by a board of directors even if I don’t always agree?

Do I have an exit plan that means I might not be involved in the company in three to seven years?

Once you’ve answered these questions, you’ll need to follow them up with a solid business plan. You’ll also need an executive summary that includes:

Financial overview for at least the next three years
Sales and marketing plans
Goals for the next three to five years and actionable steps to get there
Exit strategy

Keep in mind that angel investors are judging potential businesses by a specific set of criteria. Here’s the inside scoop on what investors are looking for. It boils down to:

A new or disruptive business concept
A realistic business plan
Technological superiority
Realistic valuation

Maybe this doesn’t describe your business at all. That’s great — it just means working with an angel investor probably isn’t the right fit. But if your company is headed in the direction an angel investor would find attractive, but it’s not there yet? KCSourceLink can help you move forward and get ready to pursue this funding. Reach out to our Network Navigators today.

How do I prepare to meet with an angel investor?

You only get one chance to make a first impression. So before you meet with a potential investor, make sure you’ve collected all necessary data and perfected your pitch. This is where an experienced coach can make all the difference.

First up? Get your house in order. You need that solid business plan and an executive summary. Then, it’s time to craft your pitch. It needs to cover:

The problem, the solution and why you’re the one to fix it
Market opportunity and the research to back up your numbers
Go-to-market strategy, competitive analysis and revenue model
Your team and the advantage you have over the competition

We highly recommend that you get coaching before any pitch. KCSourceLink can help you connect with experienced counselors who can provide free guidance. Call us at 816-235-6500.

A pitch can be like a job interview. You should be prepared not only to answer questions, but to ask for information, too. Here are some questions to ask angel investors.

Who can help?

Provider Information
Accelefund Accelefund helps aspiring entrepreneurs invest in their own companies using their retirement savings, without paying taxes, early withdrawal penalties or taking out a loan. We’ll walk you through a streamlined and simple process, with personalized service and expert guidance every step of the way.
ArtsKC - Regional Arts Council ArtsKC has developed programs and services designed to “unleash the power of the arts.” This includes programs for the arts community, the business community, and services to the civic community. Each specific program or service we provide to artists, arts organizations or the community at large was developed to address a need within our local arts ecology. ArtsKC continually assesses and adjusts our services to respond to the needs of our growing arts community.
Capital Access Center The Capital Access Center is a free service to help a business find Capital Resource Partners. The Capital Access Center (CAC), part of the Kansas Small Business Development Center (SBDC) and funded through the 2020 CARES Act, is a consulting service to small business owners needing Capital (Loans, Lines of Credit, etc).
Community Capital Fund Since 2012, the Community Capital Fund has deployed more than $1,500,000 to neighborhoods and grassroots organizations, as well as entrepreneurs and small businesses, organized nine Community Development Workshops that have collectively drawn more than 2,100 community leaders, and fiscally sponsored ten social ventures that have raised more than $1,500,000 collectively.
Enterprise Center in Johnson County The Enterprise Center in Johnson County (ECJC) is a venture development organization providing resources and connections to accelerate the success of early-stage companies.
equity2 equity2 was founded to provide patient capital for new and growing businesses and community-enhancing projects. We utilize Qualified Opportunity Zones as a tool for marrying capital with impact, combining both definitions of equity to achieve positive social and economic returns.
Hispanic Chamber of Commerce of Greater Kansas City The Hispanic Chamber of Commerce of Greater Kansas City is dedicated to the creation, advancement, promotion and development of economic opportunities within the Hispanic market and business community.
Innovation Stockyard The Innovation Stockyard operates the Kit Bond Science and Technology Incubator on the campus of Missouri Western State University with a focus on economic and workforce development, and animal health and nutrition.
InvestMidwest Venture Capital Forum InvestMidwest provides access to capital for emerging, privately held companies to promote entrepreneurship, business growth and expansion in the Midwest, with a focus on technology, food/agriculture, and life sciences.
Kansas Small Business Development Center at KU (SBDC) The KU-KSBDC provides free and confidential individual advising to small business owners, managers and prospective owners. The center can work with any company that fits into the Small Business Administration's definition of a "small business."
KC Collective KC Collective was developed by startup founders for startup founders. Through collective collaboration, we leverage our networks to provide introductions, mentorship, generous perks and discounts from our partners, and the education and resources necessary for driving your business forward.
KC Velocity Our purpose is to provide high quality mentoring, events and leadership services to growth oriented companies, along with networking opportunities for entrepreneurs, to result in positive business activity and facilitate job creation in Lee’s Summit.
KU Innovation Park KU Innovation Park, with locations at both the University of Kansas (KU) Lawrence Campus, and Kansas University Medical Center (KUMC) in Kansas City, is the largest incubator system in the state. It is comprised of three separate facilities totaling approximately 90,000 square feet of wet lab, office space, and shared work spaces.
Missouri SBDC at Northwest Missouri State University - St. Joseph The SBTDC offers confidential, one-on-one counseling, coaching and training to existing businesses and emerging business owners.
Missouri SBDC at University of Missouri Kansas City Missouri SBDC at UMKC is OPEN for business; both virtually and in-person for our trainings and counseling. Contact us at sbdc@umkc.edu to talk how we can help you SOAR with your entrepreneurial journey!
RedTire Assist businesses in ownership transition, succession planning, business valuation, business sales and acquisitions. Provide guidance and counselling to potential buyers. Equally assist both sides by helping the parties negotiate a fair value to make a win-win deal and complete the purchase transaction. All services are offered free of charge.
TechAccel, LLC TechAccel is a venture development and technology organization that invests across the agriculture, animal health, and food science industries. They work with startups, universities, and corporate partners to fund and advance new discoveries to market.
The Black MasterMind Group Charitable Foundation The Black MasterMind Group is designed to create strategies to help the Black Entrepreneurial Community; Start, Stabilize, Sustain, and Scale businesses in the black entrepreneurial community. The Black MasterMind Group works collaboratively with organizations, community leaders, business coaches, trainers, educators, and business leaders, to teach entrepreneurial financial literacy and business strategies helping the black entrepreneurial community secure funding.
The Toolbox: Small Business Resource Center The Toolbox is the go-to resource for everything small business in Wyandotte County, Kansas. All of our services are offered at no-cost to local residents and businesses. We provide support with planning, registering, funding, operating, and growing your business. We take the intimidating checklist of starting and operating a business and distill it down into the essentials through private one-on-one small business coaching. We want to make navigating business-related processes in Wyandotte personable, simple and accessible, so you can get back to doing what you do best — creating, innovating, and succeeding in your business.
Women's Business Center Provide training, mentoring, networking opportunities and business consulting to help women start & grow their businesses.

Kansas City Area Angel Networks

Provider Information
Enterprise Center in Johnson County The Enterprise Center in Johnson County (ECJC) is a venture development organization providing resources and connections to accelerate the success of early-stage companies.
KC Collective KC Collective was developed by startup founders for startup founders. Through collective collaboration, we leverage our networks to provide introductions, mentorship, generous perks and discounts from our partners, and the education and resources necessary for driving your business forward.
Leanlab Education LEANLAB Education is an organization that builds communities and launches transformational innovations into K12 schools.
Mid-America Angels Network Mid-America Angels is a regional network of angel investors dedicated to identifying and funding the most promising start-up business opportunities in the Kansas-Missouri Region.
Women's Capital Connection Women's Capital Connection (WCC) is a regional network of accredited angel investors dedicated to identifying and funding the most promising start-up business opportunities in the region.

Kansas Angel Tax Credit

For questions, contact the Kansas Department of Commerce at 785-296-3345.

The Kansas Angel Investor Tax Credit Program is an initiative developed under the Kansas Economic Growth Act. The program is designed to bring together Kansas-based accredited angel investors with Kansas-based, Kansas Department of Commerce-certified companies seeking seed and early stage investment.

This program enables accredited angel investors to qualify for the Kansas Angel Investor Tax Credit, and allows companies to become certified under the guidelines of the program.

Other Angel Groups

Gust maintains a list of many angel groups.

The Kansas Angel Investor Tax Credit Program brings together angel investors and companies seeking seed and early-stage investment. Investors must be accredited, and companies must be certified by the Kansas Department of Commerce. Both must be based in Kansas. Participating in the program qualifies companies for the Kansas Angel Investor Tax Credit. If you have questions, contact the Kansas Department of Commerce at 785-296-3345.

Venture Capital

Venture capital funds can also provide early-stage financing. For a list of KC-based venture capital funds, click here.

Want to narrow down these lists?

No need to suffer from information overload. Check out The Resource Navigator to customize your search. You can filter by industry, ZIP code, specific need and more. Or, give us a call at 816-235-6500 and we’ll create your Personal Action Plan of next-step resources for free.