Earning Your Wings

Still, by waiting until his start-up was perfectly positioned, Prince increased his chances of landing an angel deal. After Prince tapped his network of friends and business associates, a friend introduced him to a group of former telecom entrepreneurs, who plowed $1 million into Always On last July. The financial terms weren't much different than they had been in '88. Both groups of angels, for instance, expected returns equal to between five and 10 times their initial investments.

But today's angels weren't willing to wait. JetFax's angel investors didn't receive a return for nine years, when the company went public in 1997. This time around, the pressure is on for Prince to make an exit within five years. With IPOs harder to pull off than in the late 1990s, Prince plans to focus on finding a buyer. He would not disclose the equity stake his angels received in the JetFax and Always On deals.

But, in general, angels have always expected to get 25% to 35% of the company stock. Of course, the value of the stock varies depending on the market value of the company's assets, and, since Prince's first business was less mature, it garnered a much lower valuation than Always On.

Still, in one way at least, landing angel financing has gotten easier. Until recently, there was no clearinghouse for angels, making them difficult to find. Last year, however, the Ewing Marion Kauffman Foundation launched the first angel investor network -- the Angel Capital Association -- which has 60 members so far. Its Web site (www.angelcapitalassociation.org) features a directory of dozens of angel groups, sorted by state and region.

Even though angels are getting tougher, they've remained true to their name when it comes to offering advice and support to entrepreneurs. "They bring a lot of experience and know-how to the table," says Prince. "They have a real interest in seeing you do well." Prince's angels, for their part, used their industry connections and expertise to help him bring the WiFlyer to market in time for the 2004 holiday season.

This year alone, he expects his fledgling company to generate an impressive $10 million in sales. As far as Prince is concerned, he's found the perfect match. "If you can get good angels that offer more than a check, then you have found a great fit," he says.