Ten Tips For Finding And Working With Angel Investors
An article by Fast Company originally posted by expert David Gass reveals his ten tips for finding angels and pitching to them, based on his years of experience working with angels as well as investing in deals himself.
Gass's Ten Tips:
1. Network, network, network. Build your network and you'll build your net worth. You don't have to know an angel investor to get a meeting with one; you just need someone in your network that can connect you to an angel investor.
2. Have a Business Plan. Once an angel investor says they are interested in learning more they will want a business plan. The business plan should have all key areas mapped out such as a clear explanation of the product/service, the size of the market, the target demographic, return on investment for the investor, exit strategy, financials, pro forma, and organizational structure of the company.
3. Investors invest in people not the idea. Don't pretend to be someone you're not in order to solicit an investor. Investors want to work with people they like, they trust, and they believe can grow the business. If you pretend to be someone you're not, the investor will find out over time and the deal will likely blow up.
4. Have your elevator pitch down. You never know when you will have the opportunity to get an investor interested in your deal. You could run into an investor who wants to hear about your deal at a cocktail party, walking down the street, by email, over the phone, in a meeting or just about any way you didn't think would have been the traditional introduction. So be prepared to present a killer elevator pitch that clearly states your offer, your business, and what makes you and your company unique.
5. Put together a one-two page summary. In addition to the elevator pitch you need to have a one to two page executive summary on your business, similar to the elevator pitch, but on paper. This is something you can hand to an investor if they want to learn more without boring them with a 30-page business plan.
6. Know your numbers. Angel investors don't want to invest in a business when the owner can't articulate what the numbers in the business plan mean. The fastest way to lose confidence in an investor is when you can't explain the numbers.
7. Learn basic presentation skills. Investors want to have confidence in their investment. You are their investment. If you have trouble speaking in front of people, you need to learn the skill. You don't need to be the next Tony Robbins, but you do need to be able to provide a clear and interesting presentation that will attract the interest of those listening.
8. Know your strengths. Investors know that you aren't going to be an expert at all aspects of running a business. They want to know the truth about what strengths you have and more importantly what you believe are your weaknesses. Then you need to explain how you are going to overcome those weaknesses by outsourcing, hiring experts, or another way.
9. Have a team. A team is important for investors to see. They need to know you understand a business isn't built with just one person. You don't have to have specific individuals in place right away and they don't have to be employees. They can be mentors, board of advisors, board of directors, managers or independent contractors. At minimum have an organizational chart based on a time line for growing the business and what team members you will add over time.
10. Maintain Focus. The last thing investors want is to invest in a business only to have the entrepreneur get sidetracked with other ideas. They also want to see focus when you are presenting your deal to them. Don't have too many projects, product lines or ideas. Maintain focus on what you are offering and investors will find clarity in your offer. Clarity = Power.
Read the rest of the article on Fast Company.