How to Get an Angel Investor to Fund Your High-Risk Business?

Dec 07, 2017

For obvious reasons, traditional money lenders are usually more willing to fund businesses that are least likely to fail. Nevertheless, just because a bank has labeled you “high-risk” doesn’t mean you can’t raise the capital you need. You still have several viable options, such as high-risk loans and merchant cash advances, grants from friends and family, crowdfunding initiatives, and of course, angel investors.

Who Are Angel Investors?

Angels are wealthy people that invest in small but promising companies. Usually, they will have cash in hand and will be ready to give it to you there and then, in return for a share of your business.

While the conditions of an investment deal will vary depending on the investor you attract, you typically won’t need to pay back any money you get, as you would with a loan. An angel is only entitled to their share of your company’s value, regardless of how much it’s worth.

Angel investors, therefore, play a high-stakes game. If your business fails, there’s no way they can recover their money. The stakes will be even higher if you’re a high-risk entrepreneur, and for that reason alone, a prospective angel may think twice before cutting the check.

Getting a High-Risk Investor

If you’ve weighed your funding options and are sure an angel investor is the best way to go, start by cleaning up your business. Deal with any issues that may deter an investor, such as bad debts, uncleared taxes, unfiled patents, unresolved lawsuits and unpaid insurance premiums. If you haven’t signed up for a payment processing scheme, fill out a high-risk merchant account instant approval application as soon as you can. The objective here is to make your business as appealing as possible to an investor.

Additionally, an angel will feel more confident in your high-risk business if they know you have put in a significant amount of your own money in it as well. You’ll need to give the investor reason to believe in you, by proving you believe in yourself.

When you’re ready to reach out to an angel investor, set your preference on one that is known to work in your specific industry. Remember, getting funded is one thing, but the real value of an angel is the expertise they can provide. A knowledgeable investor will be more equipped to helping you achieve your goals than a mere cash cow.

Lastly, draft your pitch with the target investors in mind. Do your research to know what they’re looking for in a company. Angel investors usually care less about the industry you’re in, and more about where you see yourself in the future. Therefore, a proper pitch can be all you need to get an angel onboard, even if you’re in a high-risk industry.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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