Successfully Attracting Angel Investors

Successfully attracting angel investors, venture capital or equity partners requires well defined strategies that prove necessity of funding and a likelihood of profitability. Finding startup funding or major project funding can be challenging, and no one should tell you otherwise. The success of your search will be highly dependent on your ability to state your case and then back it up with in-depth analysis of the business or project based on realistic data and information.

A common mistake entrepreneurs make is using faulty data in the business plan. Angel investors are savvy and have been around the block (so to speak). In other words, investors willing to give a stranger business funding for a proposal have almost certainly developed business acumen and can spot unrealistic projections in a marketing plan or financial plan. Your business plan will be closely scrutinized and each number must be backed up with economic, marketing and financial information collected through research.  It’s unfortunate that many promising proposals submitted to angel investors are turned down simply because the projections make claims that are obviously unobtainable.

Would You Ask a Banker?

One test you can give your business plan is to ask if you would be willing to submit the proposal to a banker considering business loans. The analysis that requests for bank business loans get is always in-depth and thorough. There will be dozens of forms to complete, background and credit checks ordered, and economic data compared to the data in the business plan. Business funding or startup funding is only approved when you are able to provide:

  • Appropriate analysis of the market as well as finances related to the business
  • Detailed support for claims of potential profitability
  • Investment alternatives including angel investors or venture capital
  • Clear investor entry and exit strategy
  • Clearly written descriptions of business activities
  • Convincing arguments for investing in the enterprise

The convincing arguments for investing are critical to funding approval. The business descriptions and financial statements are essential to obtaining funding, but just as important are the arguments you make. The written and oral arguments are equally important too. You ability to communicate your business vision and need to angel investors and equity partners can make or break the deal. It is a critical component of the art of negotiation.

Making a Case for Private Money

The bottom line is that approaching angel investors is the same as approaching bankers and other types of lenders. The only difference is that the angel investors are considering giving you private money. Anytime you are asking someone to lend personal funds, the presentation of your idea must be well planned and efficient. It is the first real experience your business will have in the competitive business world.

3 Replies to “Successfully Attracting Angel Investors”

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