- 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.
- 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.
- Always ask for feedback after pitching your company. You can learn from each investor that says no, and improve for the next time.
- Try to invest some of your own money in the business. Angel investors like to see financial commitment from the management team.
- 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).
- Make sure you can explain exactly what your business does in under 30 seconds.
- 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.
- 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.
- Be enthusiastic – Investors expect energy and dedication from entrepreneurs.
- Angels like to invest in deals with other Angels who have done this before and learn from them to get started
- Make the most of social media – it’s free and a great way to get yourself known in your sector.
- When pitching for funding, don’t get bogged down in technical details, or you’ll lose the investor’s interest.
- 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.
- 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.
- Keep your pitch short and sweet, so the investors stay interested and are keen to find out more.
- When you read your business plan, put yourself in the investors’ shoes. Ask yourself: ‘Would I invest in this business?’
- Make sure your business plan isn’t too technical and that anyone can understand it.
- 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.
- To reassure investors, get someone in your team who has successful experience with start-ups and exits.
- If possible, approach investors with a working prototype. Investors like to see, touch and test what they’re investing in.
- 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”.
- Positive feedback, customer lists, presales and letters of intent are very useful when trying to convince investors.
- Join an association in the field in which your business operates. This will give you great networking opportunities.
- Decide exactly what you want from your angel: money, contacts, industry experience, entrepreneurial experience, etc.
- Investors will expect you to have a very good understanding of your competitors.
- Google has thrown its considerable weight against a new project aimed to give a helping hand to aspiring UK businesses: https://bit.ly/hrNI6G
- There’s a new iPhone app, Angel Trivia Daily, which tests your angel investing knowledge with a new question every day: https://bit.ly/h6qIZs
- The UK Government has detailed plans to help small businesses start up and grow in the UK: https://bit.ly/i5DHcR
- New 2 million Euro technology investment syndicate established by angel investors in Ireland: https://bit.ly/eWuPbh
- Connecticut tax credit tweak finds angel wings: https://bit.ly/ic3KU8
- Availability of seed funding for Irish companies at highest level in 30 years: https://bit.ly/ejQdzr
Business Plans & Pitching
- How one Group of Startups and Investors Traded the Elevator Pitch for the Ski Lift: https://bit.ly/ij38As
- The power of the pitch: Advice from the receiving end: https://bit.ly/fkDhPr
- Four Easy Steps to Credible Startup Financials: https://bit.ly/evzCrL
- Investor Presentation Basics – how to avoid a Trainwreck Elevator Pitch: https://bit.ly/fwFe8z
- Raising capital from business angels and private investors isn’t as easy as some people think. Here are some tips: https://bit.ly/gWCMU4
- An introduction to Angel Investors and how to find them: https://bit.ly/hmOOyp
- There are plenty of options for getting money to start your business. The trick is finding the solution that suits you: https://bit.ly/igw0g
- Ever heard of Apple, Amazon.com, Facebook, Google & Twitter? They all got early funding from angel investors. https://bit.ly/e6DhnH
- How to Find the Right Investor for Your Business: https://bit.ly/eNk6vz
- Obtaining Funding from Business Angels and Private Investors: https://bit.ly/hv9Eez
- The 6 Biggest Mistakes in Raising Startup Capital. Avoid these traps to increase your chances of securing funding: https://bit.ly/fBfBiK
Marketing & Social Media
- Most FTSE 100 companies ‘fail’ at social media and risk being overtaken digitally by smaller and more agile firms: https://bit.ly/foVy8A
- Five Tips for Marketing Your Startup Business on a Shoestring: https://bit.ly/fy3shM
- 10 Social Media Tips For the Startup: https://bit.ly/eZfHyD
- Top 10 Ways to Build Your Subscriber List: https://bit.ly/e5NVro
- 5 Great New Social Media Strategies (other than Facebook, Linkedin and Twitter): https://huff.to/eo9mBY
- How to Build a Winning Brand for your Startup: https://bit.ly/gOb1mH
- 5 Simple Steps to Social Media Start Up Success: https://bit.ly/g1ktcu
- How to Harness the Power of Social Media Feedback: https://bit.ly/ic7SXD
- Facebook vs. Twitter: Which is Better for Marketing? https://yhoo.it/ijbzCO
Start-Up & Entrepreneurship
- 6 ways to make your Small Startup Business look Bigger: https://bit.ly/e8ibt9
- 5 Common Startup Money Mistakes: https://bit.ly/fQaMgl
- Ex-Googlers Penetrating Startup Hierarchy. There is a Xoogler now at pretty much every top-tier VC: https://bit.ly/eMimLu
- Ten Entrepreneurship Rules for Building Massive Companies from Linkedin co-founder Reid Hoffman: https://bit.ly/eB3QAH
- 5 awesome Small Business Tools you can use to grow your business faster: https://bit.ly/hrWHCK
- 7 Tips On Outsourcing for Early Stage Startups: https://bit.ly/i6erae
- § Secrets of Entrepreneurial Superstars: https://bit.ly/e7r0mn
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.
Angel Investment News
- UK beats the US to a tech-friendly Startup Visa: https://bit.ly/grhGx9
- Angels Look for Investments as States Offer Tax Incentives: https://bit.ly/hZvBWd
- 7 Chicago angels have formed an investment network for startups in the local, sustainable food distribution system: https://bit.ly/fy3x9m
- The StartUp Visa Act will allow an entrepreneur to get a 2 year visa if a US investor wants to invest in their startup https://bit.ly/hCdWfd
- Angel Investing – A Look from Both Perspectives: https://bit.ly/gvTjFR
- How Angel Investing is Different from Venture Capital: https://bit.ly/hdyfdZ
Business Plans & Pitching
- Top 20 Questions to ask before Submitting a Business Plan to Angel Investors: https://bit.ly/eUo3VR
- Perfecting Your Pitch: Four Steps From Good To Great: https://bit.ly/gh1goH
- 10 Tips to an Effective Investor Pitch: https://bit.ly/hfU6Tg
- Implement these 8 steps in your investor pitch preparation and delivery to increase your chances of winning investment: https://bit.ly/gOyzyj
- The Top 8 types of angel investors https://j.mp/eHJqSz
- Private investors: Calling on angels: https://bit.ly/i8hiQe
- 5 Tips To Hooking Yourself An Angel Investor: https://read.bi/hlaO7q
- What business angels look for in a venture: https://bit.ly/gECKR0
- Innovation Is the Top Trait Business Angels Look for When Making an Investment: https://bit.ly/gWCMU4
- Business Angels: The Solution On Where to Find Funding:https://bit.ly/fAyLUP
Marketing & Social Media
- 5 Marketing Strategies to Increase Website Traffic: https://bit.ly/dNBton
- 5 Epic Social Media Fails: https://bit.ly/ed2ipC
- The 15 most Detrimental Social Media Mistakes you’re Making:ttp://read.bi/f8l8pe
- Measuring the ROI of your social media efforts: https://usat.ly/dLNAkH
- Top 100 social brands revealed as Dell, Nike and Starbucks top the table: https://bit.ly/gGI3Gs
- 6 Tips for Entrepreneurs Looking for Press: https://bit.ly/g9cSq7
- More Tips From Social Media Pros: https://bit.ly/fyMMCx
Start-Up & Entrepreneurship
- LinkedIn’s Reid Hoffman’s 10 Rules for Entrepreneurs: https://bit.ly/gko4xa
- 10 Revenue Models for Startups You Should Know: https://bit.ly/elOMmW
- Chinese Entrepreneur confidence index slightly up in Q1: https://bit.ly/fLaeyH
- Five Long-Term Challenges of Starting a Business that Entrepreneurs Forget: https://read.bi/fVCUuM
- Entrepreneur Magazine: Now is the best time to start a business:https://bit.ly/govNDW
- Government research shows TV shows such as the Dragons’ Den are helping to encourage entrepreneurialism in the UK: https://bit.ly/fh8IMn
- Small Business Help Center Supports Obama’s Startup America to stimulate economic growth through entrepreneurship: https://bit.ly/eHmzYg
- Top 10 Success Factors for Entrepreneurs: https://bit.ly/eGzRpq
- Ten ways to waste money on a start-up: https://bit.ly/i44TE5
The most important aspect of writing a business plan or pitching to angels is selling the problem your solution solves. Nobody is going to buy a solution for a problem they don’t have, which obviously means you don’t have a viable business.
The most important thing when writing a business plan or pitching to angels is selling the problem your solution solves. Nobody is going to buy a solution for a problem they don’t have, which obviously means you don’t have a viable business.
I recently saw an entrepreneur pitching for funding, and it had all the right ingredients – a slick pitch, a good PowerPoint presentation and a nice-looking website. All very impressive, except for one thing… Her business solved a problem that didn’t exist. By the end of the evening, I think even she had realised that she was onto a loser.
The pitches that get the investors most excited offer a solution to a problem they have or a problem someone they know has. An avid golfer, for example, will get very excited about a new golfing invention. Or, if an investor is listening to you thinking “My mate Bob was complaining about this last week, and I think this guy’s onto something”, you’ve got them hooked.
The best businesses evolve from an entrepreneur who finds a problem in their life or business and figures out a product or service that fixes this problem for others. However, before you spend your valuable time and money figuring out the solution, you need to find out whether:
1) Other people have the same problem you do;
2) Enough people have the problem to make a successful business.
After selling them the problem, you then need to give a quick and compelling description of the solution. Time is limited and you don’t want to bore the investors, so don’t get bogged down in the technology and technical details behind your solution. Try to keep it as simple and concise as possible and explain what your solution is and what makes it better than the competition. Is it faster, cheaper, more eco-friendly? If the investors want to know more about what makes it is faster and how you can make it cheaper, they’ll ask later.
Your pitch is meant to give an introduction or overview and a pitch – and a short one at that – to capture the attention of a potential investor. If you manage to sell them the problem and then convince them you have a valid solution, you should have them hooked. Then you’ll have their attention for the rest of your pitch, and hopefully you’ll manage to get some business cards and line up some meetings.