Angel Investment Network’s Weekly Funding Roundup

Here’s a roundup of some of the recent seed-stage and angel deals from around the world: 

  • Mobile data application provider Onavo closed a $3 million Series A financing round led by Sequoia Capital and Magma Venture Partners
  • iOS publisher/analytics provider Fuse Powered raises a $2 million seed round of funding led by BlackBerry Partners Fund and NFQ Ventures
  • WaterSmart Software, a water efficiency startup, has closed a $900,000 seed round of financing led by Menlo Incubator
  • Saygent, a SaaS startup that helps companies figure out the sentiment behind customer voice responses, has raised $1 million in seed funding
  • Brighter.com, a website that allows people to compare dentists based on reputation & price, raises $5m Series A funding led by Mayfield Fund
  • Axxun Inc has closed its second $100,000 angel investment under the State of Connecticut’s Angel Investor Tax Credit Program
  • VYou, the developer of a conversational video platform, wins $3 million Series A financing led by RRE Ventures & Highland Capital Partners
  • Unsocial, a business networking tool that enables people to find each other based on search criteria and proximity, obtains seed funding
  • A new social travel start-up Gtrot, has raised seed funding from Lightbank, the venture firm that invested early in Groupon
  • Mobile social network Parlor.fm closed angel funding from investment group ALM UNLTD that has made $500,000 available for its launch
  • Startup Impact Dialing has received an undisclosed amount of angel funding from the Band of Angels group for its cloud-based auto-dialer
  • Server Density, the server monitoring tool, has secured £135k angel funding from Christoph Janz, Qamar Aziz, Kyle McGinn and Distilled.net
  • Jeevanti Healthcare, who are looking to start small-scale or secondary hospitals in Maharashtra and Gujarat, wins $2.2m from Seedfund

To get regular updates, come follow us on Twitter: http://twitter.com/angel__network.

Have you managed to raise capital for your company?  We always love to hear from entrepreneurs who manage to get funded.

5 great ways to find funding for your company

In the past, it was more difficult to find angel investors because most deals were regional. However, now that it is so much cheaper and easier to communicate nationally and internationally, angels are starting to look at investment opportunities further afield.  It’s also much easier for angels to find investment opportunities outside their own area thanks to the Internet, incubators, demo days, and blogs that cover the scene. The most important question for entrepreneurs looking for funding is “how and where can I find these investors?”.

Angel Associations and Networks

Most countries have a national association for angel investment groups (e.g. The US has the Angel Capital Association (http://www.angelcapitalassociation.org/) and the UK has the British Business Angels Association. The World Business Association lists some of them and you’ll be able to find more by searching the web.  Most of these organisations will be able to give you a list of angel networks, and maybe even someone to contact about your funding request.

LinkedIn

Through Linkedin you can even do targeted searches for angel investors (by name, keyword, region etc).  For example, Reid Hoffman (unsurprisingly since he’s the founder), Esther Dyson and Peter Thiel to name a few, are all members of Linkedin. However, as most angels and angel groups receive masses of messages daily, they probably don’t reply to everyone. Also, a lot of angels and angel groups don’t like receiving unsolicited emails through social media platforms and this tactic could be seen as the social media equivalent of “cold calling”. I’d suggest joining one of the many LinkedIn groups that focus on angel investing.  You can post an outline your investment opportunity and people can get in touch with you for more details if they like the look of it.

Twitter

It’s no great surprise that angel investors also use Twitter.  For example, Ron Conway, Chris Sacca and Jeff Clavier are all big Tweeters. Twitter offers a great channel to share information about your venture and to generate buzz. The aim is to get yourself noticed and build a brand that investors believe in and are interested in.

Websites

There are a few websites (like our very own!) that allow investors the opportunity to look at startups that need capital. These sites are probably the most targeted way to find funding, as your executive summary is promoted to hundreds of business angels at once.  You also don’t have to worry about sending unsolicited messages, as all the investor members on these networks are actively looking for investment opportunities.  Most of these sites have a national focus, but Angel Investment Network has 25,000 investors and 30 networks worldwide, so you can find angels from around the world.  At the top right corner of www.angelinvestmentnetwork.net, you’ll find a drop-down list with all our sites so you can find the one closest to you.

Incubators

Incubators and startup accelerators are becoming increasingly popular as a source of early-stage funding. Some examples include Techstars, 500 Startups and Y Combinator – the latter has funded over 300 startups since 2005. A further benefit is that they’ll also provide valuable advice, support and resources to drive your business forward.

I’d love to hear from anyone who has managed to raise capital.  How did you do it?

Angel Investment Network’s Weekly Twitter Roundup

Angel Investment News 

Business Plans & Pitching

Fund Raising

Marketing & Social Media

Start-Up & Entrepreneurship

To stay updated, come follow us on Twitter: http://twitter.com/angel__network.

Read anything interesting? Feel free to add links to any articles or resources you’d like to share with the angel community.

50 Quick Tips on Raising Angel Funding – Part 2

  1. Avoid general statements, such as “We will provide excellent customer service” or “I am very hard working”.  Everyone could make these claims. 
  2. Do due diligence on any investor you’re thinking of doing a deal with.
  3. Try to target angel investors with experience in their industry – their expertise will be invaluable.
  4. Expect the angels to want an active day-to-day role to share advice, knowledge & expertise.
  5. Ask for a non-disclosure agreement to be signed if there is any information you feel uncomfortable disclosing to the investor.
  6. Remember no legitimate investor will ask you to pay money.
  7. Be completely open from the beginning.  If an investor finds a skeleton in your closet, the deal will be off.
  8. A market with high growth potential is very attractive to investor.
  9. Start your pitch with “a hook” – a statement or question that grabs the investors’ attention and makes them want to hear more.
  10. Don’t write “No Competition”.  There is always competition, even if it is indirect competition.
  11. Be enthusiastic – Investors expect energy and dedication from entrepreneurs.
  12. Don’t use acronyms – people outside the industry won’t know what they mean.
  13. Gestures, body language (e.g. nodding and smiling) and confidence are very important when you’re speaking to investors.
  14. Ask family, friends and colleagues for feedback about your business plan and pitch.
  15. The more you practice your pitch, the more relaxed you’ll be when you’re in front of the investors.
  16. It’s really worth spending money on a good lawyer.
  17. Don’t be afraid to admit your weaknesses and admit you may need help in certain areas or strengthen part of your team.
  18. Use short paragraphs, bullets and lists: This makes it easier and quicker for the investors to read.
  19. Don’t write “Guaranteed Return”.  No return is guaranteed!
  20. Check your business plan for spelling and grammatical errors they make you look unprofessional.
  21. Don’t say “My projections are conservative”.  90% of companies say the same thing.
  22. Make sure you have legit market research to back up your claims about market size and competition.
  23. If applicable, investors will want to see that you have the necessary patents and protection in place.
  24. Don’t say “We only need a 1% marketshare to have a turnover of 1 million” – financial projections don’t work like that.
  25. Last but certainly not least (here comes the sales bit), visit www.angelinvestmentnetwork.co.uk if you need any help raising funds.  In the top right corner, you’ll find a drop-down list of all our networks around the world.

50 Quick Tips on Raising Angel Funding – Part 1

  1. Remember to tailor your business plan. The plan you pitch to an angel should be different from the one you use to pitch to a bank.
  2. Figure out the least you need to get to the next stage and raise that amount. Then you’ll have to give away less equity.
  3. Always ask for feedback after pitching your company. You can learn from each investor that says no, and improve for the next time.
  4. Try to invest some of your own money in the business. Angel investors like to see financial commitment from the management team.
  5. Have business plans and pitches of various lengths (e.g. 50 words, 200 words, 500 words, 1,000 words, 2,000 words and the full plan).
  6. Make sure you can explain exactly what your business does in under 30 seconds.
  7. Remember that investors will want high returns, due to the high risk nature of angel investing.  Of every 12 companies they invest in 1 might be huge, 2 might be good, 3-4 will be marginal, and the rest will fail.
  8. Never tell an angel “the product will sell itself”. It won’t! An investor wants to see a clear USP & well thought-out sales strategy.
  9. Be enthusiastic – Investors expect energy and dedication from entrepreneurs.
  10. Angels like to invest in deals with other Angels who have done this before and learn from them to get started
  11. Make the most of social media – it’s free and a great way to get yourself known in your sector.
  12. When pitching for funding, don’t get bogged down in technical details, or you’ll lose the investor’s interest.
  13. The management team is one of the most important factors for angels.  Consider what skills you and your existing team have and what needs to be brought in.
  14. Angels look to invest in strong markets.  You can fix a lot of things about a business, but you can’t fix a bad market.
  15. Keep your pitch short and sweet, so the investors stay interested and are keen to find out more.
  16. When you read your business plan, put yourself in the investors’ shoes. Ask yourself: ‘Would I invest in this business?’
  17. Make sure your business plan isn’t too technical and that anyone can understand it.
  18. Don’t be afraid to ask the investors questions about their background.  They should be keen to impress you and willing to answer any questions you might have.
  19. To reassure investors, get someone in your team who has successful experience with start-ups and exits.
  20. If possible, approach investors with a working prototype. Investors like to see, touch and test what they’re investing in.
  21. Use facts and stats rather than personal opinions.  “I think this market will grow” isn’t as powerful as “This market has grown 30% annually for the last 3 years”.
  22. Positive feedback, customer lists, presales and letters of intent are very useful when trying to convince investors.
  23. Join an association in the field in which your business operates. This will give you great networking opportunities.
  24. Decide exactly what you want from your angel: money, contacts, industry experience, entrepreneurial experience, etc.
  25. Investors will expect you to have a very good understanding of your competitors.

Raising capital from business angels and private investors isn’t as easy as some people think

There’s no question about it: Raising funding for a start-up from angel investors or venture capitalists is hard.  Some entrepreneurs seem to think that investors should be falling over each other to fund their project, but the unfortunate truth is that only a small percentage of entrepreneurs are successful in raising capital for their start-up. 

Unlike venture capitalists who invest other people’s money, angels invest their OWN money.  It’s important to put yourself in the investors’ shoes – how easily would you be persuaded to give £100,000 of your own hard-earned money to a complete stranger?  Angel investors may be willing to take on more risk than most, but it’s still a tough job to get them to write you a cheque.  Here are a few things to remember when approaching angels.

Business angels are in it to make money

You must be willing to give up some ownership or control of your business, and be able to show a significant return within 3-7 years, as well as a profitable exit strategy.  Angels invest for the same reason other people do: to make money. Investing in early stage companies is high risk, so investors expect to see high returns.

Don’t stop moving your business forward

Try to develop your business as much as you possibly can: build a prototype, interview potential clients to gauge their interest, prove the concept, get some letters of intent or pre-orders and possibly even start generating some revenue. The more traction your business has, the more attractive it will be to investors.

Build a team with experience in the right areas

Angels invest primarily in people, so you need to build an experienced management team that has industry expertise and a track record of growing and exiting businesses.  If your team lacks certain skills, try to plug these gaps before approaching investors.  If you can’t afford to hire staff, you may want to consider giving away sweat equity to make sure you have the right team in place to first make your company investable and then drive the business forward.

Be realistic about valuations

Although you may think your business has the potential to earn you and your investors millions, that’s all it has: potential.  Turning a good business idea into a profitable business is harder than most people think, and there are so many potential pitfalls – a new competitor, misspending your startup budget, hiring the wrong staff, the list goes on… Work with your accountant to build realistic numbers and a realistic valuation with clear assumptions that can be defended.

Take investors’ criticism on board

Entrepreneurs looking to raise capital for their start-up will be rejected by most of the investors they approach. Listen when potential funders reject your ideas – their criticism is the best feedback you’ll get about how to make your business more appealing to investors and increase your chances of getting funded.