Wealthy individuals who invest in startup companies are called “angel” investors. The problem with this angelic term is the tendency for first-time entrepreneurs to assume that wealthy angels are warm-hearted and will rescue entrepreneurs and small business owners from the perils of a cash crisis.

The truth is that angels, especially members of angel investment clubs, are demanding. They set high standards and expect entrepreneurs to be "sophisticated" about the fundraising process before making their first pitch for capital.

Even though angel club members can be demanding, don’t assume that “being demanding” automatically means that they will slow down the fundraising process.

Actually, I find that it is the entrepreneurs who slow down the fundraising process all because they are not “deal ready.” Here are some issues that create needless delays:

1. Wrong corporate business structure.
   
   Most angels prefer to invest in businesses that are organized as standard C-corporations. The primary benefit to investors is that C-corps operate with board of directors’ oversight, can issue different classes of stock and have no limitation on the number of stockholders.
   
   In contrast, S-corporations have several restrictions on the size and source of investment activity. Similarly, businesses organized as Limited Liability Companies and partnerships are usually asked to restructure to C-corps before receiving funds from angels and venture capital fund investors.
2. Misunderstanding key deal terms.
   
   Most founders of new C-corp businesses receive shares of common stock. Savvy angels, however, usually insist on receiving a separate class of stock, called “preferred stock.”
   
   All the terms of a company’s preferred stock are negotiable and different investment rounds are likely to give stockholders different advantages over common stockholders.
   
   The best way to navigate deal terms quickly is to hire a good securities attorney who has worked on many angel fundraisings, rather than a generalist corporate attorney who is not attuned to current deal terms. Knowledgeable securities attorneys really know what’s worth negotiating without delaying or stopping a promising funding opportunity altogether.
3. Wrong pitch focus.
   
   Nothing makes me wince more than listening to entrepreneurs waste precious presentation time talking about issues that are not top priorities to investors. Yes, its fun to talk about cool features of new websites, games and gadgets but not at the expense of addressing the marketing, partnership and pricing strategies that will make a business successful against its competitors.
   
   Angels want to know how their money will be spent and when a business will reach positive cash flow and profitability. Entrepreneurs who are vague about these issues will lose out to other entrepreneurs who know their numbers, their industry and their game plan.
4. Impatience.
   
   Potential investors are entitled to ask detailed questions about a business, its managers and its competitors. Entrepreneurs who express frustration with questions or try to rush investor decisions won’t like the fast answer they will get from investors.
   
   Basically, smart angels are intuitive and watchful. They assume that impatient entrepreneurs will eventually behave the same way when customers take awhile to make buying decisions.
5. Assuming angels are always available.
   
   Entrepreneurs who complain about “investors who don’t return calls” or think their work schedule is more important than a potential investor’s schedule are going to have an empty bank account for a long time to come.
   
   Because most angel investors lead active lives and look through business plans during their spare time, you have to adapt to their schedule. After your presentation at a club meeting, it’s up to you to close the deal with individual members. All email communications should be short and meetings should be set up wherever and whenever it is most convenient for the prospective investor.
   
   Raising funds from angels requires finesse, patience and focus. You can do it!