Angel investors are individuals with immense personal wealth, as well as often having considerable experience, a thick list of contacts, and a stamp of approval that all entrepreneurs crave. Angel investors, being extremely successful themselves can help you with valuable business tips and investment strategies as well as capital. We’ve broken down a few tips to help give you the best chance at attracting angel investment for your business.
Angel investors are known for their risky investments. However, that’s not an excuse for you to slack off when preparing your presentation. A strong, structured, and well researched business strategy is the most important thing for angel investors. Showing you’ve studied all aspects of your field, predicting the strategies of your competitors, protecting your intellectual property, smart plans to reinvest your profits, and new and unique marketing concepts will all be noticed carefully by the savvy investor. Most important is to sell your concepts in a way that shows how you are different from the rest of your industry, and how that difference will lead you to succeed. Angel investors are most attracted to innovative business ideas, but that’s no excuse to overlook the common obstacles all businesses face.
Show Your Clout
While presenting your data to the angel investors, be sure to show your strongest side, whether it be revenue growth, user engagement length, or visitor metrics. While they’re unlikely to overlook any weak points, showing you know your strengths, and how to capitalize on them, makes a good impression. Introducing a competent team can also help angels trust you more. Having a designated accountant, marketer, developer, tester, and other roles on board shows you have a strong plan for growth in place, even if all those hats are on the same two or three heads. If there is an added support system who back your plans, the chances are that the investor will be more given to investing in your business.
Reach out at a Personal Level
When you are pitching your idea to an angel investor, it might be useful to remember that your success might also hinge on connecting at a personal level. While no serious investor will give you money just because he likes you, it’s important to remember that you will likely have a close relationship with an angel investor as they help your business grow, and they will not want to spend lots of time with someone they are uncomfortable with. Making sure that you have a personal connection with the investor is a good way of ensuring that you stand a chance when it comes to securing their interest and investment.
Don’t Get Caught Up Over Details
When it comes to the contract, don’t sweat too much over the details. While a typical contract will include lots of legalese you might find objectionable, remember that they have much more experience than you and know how to avoid potential pitfalls in the relationship down the line. Negotiating the main points of interest such as equity shares and level of involvement the angel will have are fine, but if you need to nitpick over details try and have a lawyer act as a middleman in your stead, and realize that big arguments early on are often a red flag to potential investors.
Researching the background and information about an investor can help inform you on their motivations, business principles and other things they might consider important. In any presentation, the first rule is to understand the audience, and knowing what an investor’s expertise and interests are can help you make an appeal that will speak to them more than the same slide deck they saw from 50 other businesses this week.
When talking with angel investors, stay patient. Raising capital, especially when you are just starting out, is a process that can take months. Continued patience and persistence will do wonders. Angels are often bombarded with proposals, and its up to you to make sure you stay on their mind. Be polite, but make sure you keep pushing talks forward.