Angel investors are getting tougher. To land seed money, you should, too.

You’ve probably heard the rumors: Angel investors aren’t as angelic as they used to be. Such investors, generally wealthy individuals, have been essential to American entrepreneurs, betting on early-stage ventures that frighten most other investors. But angels are getting a lot harder to please. And that has implications for any entrepreneur seeking seed funding.

The good news is that angels are picking up much of the slack from venture capital funds, which are increasingly focusing on later-stage outfits. Last year alone, 42,000 angels plowed $18.1 billion into early-stage companies, compared with a mere $304 million plunked down by VCs, according to a recent study by the University of New Hampshire’s Center for Venture Research. But while angels have always had high hopes for the companies they invest in, these days they rely a lot less on their guts than they do on the facts, says David Rose, chairman of the New York Angels, a 50-member group in Manhattan.

From: Inc. Magazine, January 2005 | Page 40 By: Darren Dahl

Full Story: http://www.inc.com/magazine/20050101/getting-started.html