Angel
investment is one of the most common capital sources for both startups and
relatively new companies looking to expand. But drawing high-net worth
individuals toward an early-stage enterprise or business proposal requires well
placed effort. First of all, angel investors can’t fund something unless they
know it exists, which means you’ll need to focus on getting the word out in the
right circles. Second, they’re unlikely to bet on a venture unless it offers a
substantial return. So a sound business plan and credible growth and revenue
strategies are key.
However,
according to research by Shai Bernstein (Stanford Graduate
School of Business), Arthur Korteweg (University of Southern California
Marshall School of Business), and Kevin Laws (Chief Operating Officer of
AngelList), arguably the most important factor is the quality of the
personnel that the candidate organization has assembled.
Exceptional
founders, and a reputable team.

Seek out
promising angels, and do research on them.
Many
angels specialize in a particular industry or niche, and it’s a good idea to
seek out individuals whose areas of interest or specialization accord with your
own, particularly if your proposal is esoteric or technical. Find out what sort
of endeavours those investors have funded in the past. You can even attempt to
contact previous beneficiaries of the angels you’ve identified as prospective
funders of your project, to ascertain what worked in the past and what those angels
tend to look for.
A strong
pitch.
If
you’ve ever watched a full episode of the American network television program Shark Tank—or its Canadian counterpart, Dragons’ Den—you may already have a good
idea of how to distinguish a
high-quality funding pitch from a lousy one. If angel investors invite you to
pitch to them, you need to be ready.
Aim
for a duration of around ten minutes—enough time to cover all the essential
information without rambling or rushing. If your presentation is in digital
format and consists of slides, anticipate spending around one minute on each
slide. However, make sure you also have an analog Plan B in case of technical
difficulties, which have a nasty habit of cropping up unexpectedly right at the
moment of truth.
Unconventional
ideas can be powerful in the business world, but in the context of a funding
pitch, a pair of conventions are worth observing. One is appropriate attire—you
should strive to portray yourself as a consummate business professional and/or
choose an outfit that’s suited to your line of work. Another is the hook—you
should begin the pitch in a way that piques the investors’ interest. Present
them with a problem or dilemma they can relate to, and offer them an innovative
solution.
Answer
the following questions in your pitch:
•
What have you and your team
accomplished so far?
•
What does your target
market/demographic look like?
•
Who are your competitors?
•
What is your strategy for both
marketing to customers and delivering your product or service to them?
•
How do you generate revenue?
•
What do you anticipate your
revenue stream would look like over the next five years if you met your funding
goals? Is your assessment realistic?
•
How much money do you need from
the investors to whom you’re pitching?
•
What is your endgame? Do you
plan to eventually take your business public, sell to an established firm, or
something else? (Angel investors like to know how they will recover their
investment.)
Finally,
rehearse your pitch until you know it like the back of your hand. Run it by a
trusted friend—if s/he would invest in your business or proposal, there’s a
good chance that an angel would too.
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