The difference between angel investors and venture capital firms always seems to confuse entrepreneurs.
In truth, the difference is fairly clear-cut.
Who are they? What do they look for? How can they help? How much are they likely to invest? These are all key differentiators.
As an entrepreneur looking for funding, it’s important to understand these differences. Your choice of who to approach and when could have a significant effect on the efficiency of your round.
Xavier Ballester, the co-director of Angel Investment Network’s brokerage division, explains more in this recent interview. He’s talking to our friends at Linear, a specialist prime broker and award-winning hedge fund incubator based in London and Hamburg.
Prefer to digest your content in written format?
I wrote an article on the topic for Angel Investment Network’s Learn centre. You can read it by clicking here.
Movivo is a potentially life-changing app for mobile phone users in emerging countries. It provides an invaluable service for the 2.5 billion people who still don’t have bank accounts because of infrastructure issues.
They previously secured financial backing from Microsoft, a leading Silicon Valley investment fund and top British VC firm. Their investment was based on the strength of their idea and its potential to help emerging countries.
But the experience of the founders was equally important. The team comes first on my list when it comes to deal evaluation for investors – you can read the whole article here.
As an insight into the way we work at Angel Investment Network and how we raised £188k for Movivo, I wanted to show you how we launched them to our network.
The first part of our strategy is always a carefully curated mailout. This is sent to our network of angel investors and investment funds.
This mailout is designed to build leads from potential investors. We entice them with the main impressive pieces information; they can then get back to us with questions and requests for introductions.
I have copied below a screenshot of the mailout we sent last June. This ultimately raised close to £200,000 for Movivo:
– Meet famous entrepreneurs like Mark Wright (BBC Apprentice Winner)
– Learn from Angel Investors such as Mike Greene (C4 Secret Millionaire)
– Meet a range of leading financial institutions
– Get free 1-2-1 with Top Investors & VCs
– Attend talks from industry experts
Wondering what it’s all about? Check out what it was like last year in the video below:
“If I were an SME today and I’d just started a business or I was growing a business in my early days, I’d be here at the Show, because I want to learn more and more about all the different forms of funding available, meet potential funders every year, meet with fellow entrepreneurs and learn from them, learn from the speakers, who are very experienced.” Lord Bilimoria of Cobra Beer
“My mission is to help entrepreneurs to set-up and grow their business. So, the Business Funding Show is a perfect event for this, as it’s all about helping entrepreneurs to learn how to get money and grow fast.” Richard Reed of Innocent Drinks
Our very own Xavier Ballester will also be giving a workshop on raising money through angel investors!
I just got sent this simple infographic from our friends at www.personalicome.org. It’s a great reminder of all the avenues open to you if you’re starting out as an entrepreneur for the first time. Some should be pretty obvious, but there are a couple of interesting ideas.
What’s the point of a proposal? Why use sites like Angel Investment Network? Why not just send your full business plan to people you want to invest?
Well, for a start, not everyone has the contact details of a large number of investors just sat in their inbox. Networking/Connection sites like Angel Investment Network hold the key to advertising your latest business venture to thousands of prospective investors so that you can find the right ones to suit the nature of the project. That sounds a little sales-y, I know, but it’s important to understand in order to realise the significance of the short proposal instead of the full-blown business plan.
When you’re marketing an idea to thousands of people, not just in the fundraising community but anywhere, you cannot simply take it for granted that people will actually take time to consider your idea; in any marketplace thousands upon thousands of ideas are competing to grab the attention of the onlookers. Precedence is not always, and certainly not necessarily, defined by merit, but rather by the ability to capture attention.
Don’t think ‘I know my idea is brilliant, so why wouldn’t investors read my business plan? They’d be stupid not to…’ That attitude will help you raise the square root of nothing. Think instead ‘How can I make it so that investors literally cannot wait to get their greedy paws on my business plan and start properly digesting my idea?’
Here’s where your short proposal comes in. It is meant to be pithy and concise. Something that can be easily understood and result in them wanting to know more. It is the first rung on the ladder towards them investing; and that can often be the hardest part – getting them to step onto the ladder. Once they’re on, of course some may fall off on the way to the top, but at least you’re beginning to win them over and it becomes progressively harder for them to get off.
As such you should consider your proposal as a ‘hook’, to use Nir Eyal’s term, or in internet-speak a CTA (call-to-action). In your proposal make them love your idea enough to take the next step. Tell them the best bits. Don’t swamp them in superfluous detail.
It’s funny what working near a beach for 3 weeks will do to one’s ability to keep their blog updated! But I’m back in the office now, back to the grindstone so your weekly dose of pitching/proposal advice is back up and running.
The previous 4 tips have talked in general terms about the ideal structure for your proposal: Tip #1 advised you to put your achievements first, Tip #2 encouraged you to then articulate the problem you solve, Tip #3 how you solve that problem and Tip #4 told you to make it clear how big the market opportunity is.
This week I wanted to talk about tone. How should your pitch come across? Funny? Serious? Detailed? Light?
When I arrived in the office this morning one of my colleagues was bragging about how he had re-written someone’s proposal for them after they had got no interest from investors after 90 days on Angel Investment Network. Now the business wasn’t bad at all, but it wasn’t an Uber or Facebook by any stretch of the imagination. The reason the guy had done so poorly was that the way he had written his proposal was about as exciting as watching paint dry in prison.
My colleague made no drastic changes – the fact of the business and its products (innovative power tools) were beyond his control. And yet his changes resulted in 82 investors contacting the entrepreneur. 82. When previously he’d got zero.
What did he change? He injected some life, some enthusiasm, some excitement into the proposal. The subject matter remained the same, but he gave the proposal a buzz. He infused it with a sense of success just around the corner; and that’s what intrigued the investors.
So give yourself a fighting chance and make sure you strike the right tone…
Some good news came in over the weekend in a press release from Atlantic Healthcare. It’s encouraging to see our Pharmaceutical companies flourishing alongside their arguably more trendy tech counterparts.
We raised circa £350,000 for Atlantic Healthcare as part of their seed round. It’s taken a few years, but that’s nearly always the way with pharmaceuticals; and now they’ve just closed a $24 million round with funds coming from the founders of Salix Pharmaceuticals, Inc.; Fullbrook Thorpe Investments LLP (the family investment arm of Andy Leaver, founder of Clinigen Group plc); and LDC (the private equity division of Lloyds Banking Group plc); alongside their existing investors.
This round will allow them to complete the pivotal Phase 3 of their product development and will make alicaforsen market-ready for the treatment of IBD pouchitis which currently has no approved treatments.
For no other reason than today is the first day of a new leap year cycle, I’ve decided to add a new feature to this blog. Each week I’m going to write a short post offering easy-to-implement advice on writing a fundraising proposal to investors. There will be a slight steer to benefit those entering proposals on , but I promise that the advice will be easily applied wherever you’re submitting a proposal.
I read hundreds of proposals a day. Literally hundreds of the things in the form of: pitch decks, executive summaries, investment site templates, incubator/accelerator templates, you name it. There’s always more to learn, but by now I’ve got a pretty good idea of what investors love and what they loathe when it comes to fundraising proposals.
So here’s Tip #1 “Never leave the best till last”
Put your most impressive information FIRST.
Investors like the rest of the world read from beginning to end. Well, not quite, often they never reach the end because they get bored. If this happens and you’ve left your most impressive piece of traction till the end, they’ll never know how great your company is. If you want to end on a positive note, simply repeat the positive note with which you started your proposal!
Grab their attention from the start. If you’re using or planning on using Angel Investment Network’s proposal form to showcase your business to prospective investors, this is why they recommend including attention-grabbing details in the ‘Short Summary’ section.
Take it to heart, learn it, stick it to your fridge, apply it…
For many entrepreneurs, no matter what stage they are at in their fundraising journey, it can be difficult to see the wood for the trees and hold a sense of the bigger picture in mind. This helpful infographic, courtesy of Funders and Founders, gives a clear picture of the funding process from Day 1 to IPO.
To read the full article which gives a detailed analysis of all the stages follow this link
This week I wanted to share a resource with you that we normally only give to our customers on Angel Investment Network…
It’s a short e-book that sets out in as simple as possible terms what should be included in the pitch deck that you send or present to prospective investors. An important point to be noted here is that ‘what should be included’ is, more often than not, ALL that should be included. In your pitch deck you’re trying to engage and persuade – to blow minds not to numb them. So the details you give should be the ‘minimum effective dose’ to get investors thinking and wanting to find out more.
The purpose of our site is to connect entrepreneurs and investors, so you might say that teaching people about pitching falls beyond our remit; but you’d be wrong.
1. We like to make sure our entrepreneurs are as well prepared as possible for the result of any connections made through our site (or elsewhere), so that down the line they can write to tell us how successful they’ve become.
2. We see so many bad pitch decks and so many good’uns (literally thousands a week!) that we know what gets investors giddy…