Getting your startup or new small business off the ground may require a substantial amount of funding. One possible resource for such funding is angel investors. However, there is a great amount of competition to secure funding from such benefactors. Gain an edge in the competition for investor dollars by learning some key tips for dealing with angel investors.
Know What Angel Investors Are Looking For
There are a few key elements that are important to angel investors in terms of your business presentation. Above all else is the bottom line – the return the angel investors can expect on their investments. Angel investors are looking for a well-constructed business model, a thoughtful and passionate presentation of achieved or anticipated goals, and a reasonable valuation of your company and its projected returns. They pay close attention to your company’s market opportunity and its ability to become successful; success and growth are directly tied to your company’s ability to generate profit and to pay back, with interest, the financial assist the angel has provided.
If you are approved for funding, the average investment falls between $25,000 to $100,000, but this amount could be higher depending upon the type of business you have, how much funding you need and the angels’ interest in your company. The process takes time for the completion of due diligence, numerous meetings and negotiations. Don’t expect angel investor funding to come through in less than six months.
Find the Right Investor
Angel investors are often former business owners or are closely tied to or specialize in certain types of businesses or industries. Increase your chances of obtaining funding by researching potential investors and focus on those who have an identifiable interest in your industry. Presenting the pitch for your internet café startup to an oil and natural gas investor indicates a lack of research and preparation.
Keep It Short
Angel investors spend hours listening to pitches much like the one you are going to present. By agreeing to hear your pitch, the angel investors have already invested their time in your company. Respect that investment by not abusing it. Rehearse your pitch repeatedly, in front of different audiences, and discard information that is tedious or unnecessary. If your pitch is more than 20 minutes, it is too long.
Keep Angels Informed
You successfully pitch to angel investors, and they have invested in your startup. This is only the beginning of an ongoing relationship you will have with the investors. Provide them with consistent updates about your company – regular reports and figures that accurately indicate how your company is progressing and using their investment capital. As stakeholders in your company, your angel investors are entitled to this information. Additionally, they are interested; their investment in you demonstrates that fact. Angel investors shouldn’t be treated like they’re just a bank, but a real partner in your business success.