At Bytestart, we have come across hundreds of would-be entrepreneurs over the past decade. We have also had the pleasure of meeting plenty of angel investors and industry insiders. Here are some tips on what business owners should do to impress potential investors.
Valuing your idea
Don’t assume a business angel will be as interested in your idea as you are. Small business owners are notorious for catching ‘cabin fever’ and valuing their business idea at ridiculous multiples of its real value on the outside world.
Identify your skills
Successful entrepreneurs know their strengths… but they also recognise their weaknesses. When pitching for investment, be clear on what skills your bring to your table, what the strengths of your team members are, and what outside expertise you are seeking to make your plans succeed.
Realistic financials
Make sure you present a sound financial forecast, and be prepared to back up your figures when challenged. Be careful when setting out any plans to remunerate yourself or your colleagues while building up the business. Angels will not be interested in funding a ‘lifestyle’ business – something which consistently annoys the self-promoting stars of BBC’s Dragons’ Den.
Make a good impression
Not all investors will be as taken with the “new media” look so many would-be entrepreneurs go for (particularly in London). A clean, simple, professional look is always worth adopting when meeting business angels. When you’re a successful entrepreneur, you can wear as much designer stubble as you like, and never need to wear a tie again!
Presentation
Make sure you commit any background information, plans and forecasts to paper. Have a copywriter go through your plans if necessary, and don’t be frugal when spending money on presentation.
Exciting the angels
The vast majority of angel investors are not looking for a ‘safe investment’, they are looking for a business idea which will be exciting to get involved in, as well as successful. You might think that your Excel to web spreadsheet generator is the most exciting thing in history, but you must see things from the angel’s point of view.
‘Fluid’ business plans
Although business plans are important when seeking outside investment, be aware that much of what is typically contained inside a plan will change over time. Sales, and customer forecasts are often wildly unrealistic. Seasoned angels will be aware of this, so make sure you can talk the talk and not simply rely on what you’re committed to paper.
Unique selling points
If you are starting a business, and even more so if you’re looking for outside funding, you must be sure to work out what the Unique Selling Points (USPs) of your business idea are. How will/do you differentiate your product or service from the rest of the market, and how do you prevent a competitor from copying what you do?
Be yourself
As in all walks of life, people buy from people. Angels will often want some kind of involvement in the business, especially if they have experience in your industry area – which is often the case. Always be yourself, open and honest when dealing with business angels.
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