If you’re considering using angel investors for your start up company, there are two critical questions to consider. First, ask yourself is your company in a position to attract angel investors. Second, ask if using angel investors is the right fit for your company.

Angel investors are usually wealthy individuals who are not professional investors, but are instead excited to help entrepreneurs start promising businesses. Many angels are former entrepreneurs themselves who want to give back to their communities by contributing to small business. But they are also investors looking for a return on their investment. The way they get that return is when the entrepreneur grows the business and exits it through a sale or merger.

With that in mind, entrepreneurs seeking funding from angel investors should only do so when they are in the best position to gain approval. That time is when your product is developed, you have customers who are willing to confirm that they will buy from you, you have invested your own money and exhausted other alternatives for getting the money; and you can demonstrate (in a business plan) that the business is likely to have rapid growth in the next three to seven years.

The angel investor will be looking for a strong management team, a unique product or service with a large target market, personal investment in the company, and an exit strategy for him within seven years, and the potential for a significant return on his investment.

An equally important question to ask is whether seeking angel investors is right for your company. Keep in mind that because angel investing is extremely high risk for the investor, they require a high rate of return from the company. This makes angel capital one of the most expensive channels of financing a business can receive. Although angel investing is a good option if you cannot secure traditional forms of financing, you will pay for using this type of financing.

If you think your company meets the criteria to satisfy investors and you think angel investing is the right type of funding for your company, you can find an angel investor through The Angel Capital Association or Angel Capital Education. The next step will be for you to complete an application with that angel. Any additional requirements will be found on the individual investor’s website.