Infographic: A Visual Look at Funding — Comparing Equity vs Debt Financing

Business loans, angel investors and venture capitalists — in many cases, these three entities are determining the success or failure of small businesses across the country.

This graphic takes a deep look at each source of capital, have uncovered how much money is going where, and identified common considerations, compromises and benefits of each. In the end, this gives a good visual look at the state of business financing in today’s economy.

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7 Common Mistakes Made by Angel Investors

As the head of Angel Investment Network, I’ve had the chance to speak with a lot of angels over the years.  When discussing their experiences, some things kept coming up again and again…

1) Not looking at enough deals

Make sure you look at as many investment opportunities as possible.  The more business plans you read, the more likely you are to find the one that pushes all the right buttons.  It also lets you  notice industry trends and see if any competitors and emerging.  Last year I read about 50 plans about wind turbines, who all claimed to be the best.  You quickly realize that there are so many new players fighting for market share that it would be a very difficult call to make in terms of making an investment. Professional venture capitalists expect to look at 100 companies for every investment they make, so you should join several angel groups to make sure you see as many deals as possible. read more

Creating an Early Stage Pitch Deck

A picture from the white board at Ryan Spoon’s presentation on creating early stage pitch decks (primarily focused on the seed round).

Please take this for what it’s worth: just one investor’s opinion. As is true with everything – the best answer is “it depends”. It depends on your background, your company, your raise, and your audience.

50 Quick Tips on Raising Angel Funding – Part 2

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