If you want a real chance to gain the support of accredited investors, you need to understand the harsh realities of their world.

What’s the ideal way to fund a new business or grow an existing one? How about having customers provide all the necessary capital.

I just came across several information products online claiming that angel groups are the perfect way for entrepreneurs to raise business capital. Respectfully, I disagree. Here’s why.

When raising money, there’s at least one truth that’s difficult for entrepreneurs and investors to candidly discuss, even though it’s a vital factor in the decision-making process of most investors.

We talk about many subjects when it comes to raising business capital, but there are three core issues around which funding success revolves. The more you can demonstrate strength in these areas, the easier it will be for you to get the funding you need on the most favorable terms.

I make a living by helping entrepreneurs prepare for the capital raising process. I’ve seen angel investors, venture capitalists, and trade associations strongly recommend that you should NOT hire people to help with your financial projections and business plans. Obviously, I disagree with this recommendation, but I believe there are several basic principles that apply to entrepreneurs trying to raise money that we should all be able agree on, leading to mutually beneficial coexistence.

Imagine for a moment you’re a hungry entrepreneur who needs capital to launch or grow a business that has some real potential for success. You started talking to angel investors about your deal, and finally connected with one that’s really interested! The angel looks you in the eye and asks, “Are you looking for smart or dumb money?”

While aspiring entrepreneurs can learn much from angel investors and venture capitalists about getting funded, 93 percent of small business funding comes from somewhere else. Somewhere that shares key viewpoints of high profile investors, but also takes many other issues into account. Things that are usually much more favorable to business owners.