Should I Seek Out Angel Investors?

Does it make sense to get angels to invest in my business? I don't plan to do an IPO or selling. So how do I provide for liquidity or return for the angels without these mechanisms?

Angel investors -- successful business executives, engineers or other professionals who have an interest in investing in businesses -- can add value to your business through their individual expertise or through their network of connections. In addition to cash, a good angel investor can provide meaningful introductions to sources of financing, credit or vendor relationships, even help you hire new executives.

As with any type of investor, however, never accept an equity investment without having a reasonable plan of how you will provide a return on that investment. While angel investors typically enjoy helping a company grow in a more hands-on way than the average investor, don't lose sight of the fact that their primary motivation is a return on their investment. And it's not enough for your company just to become profitable. You need to be ultimately able to provide a cash return on investment within a five- to seven-year time frame.