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.
If you have a fledgling business, or an idea that you think you can turn in to a viable business, you might want a business angel to help fund it. But before you charge ahead, here are 9 tips on what you need to do to impress business angels and potential investors.
1. Value your venture or idea sensibly
Don’t assume a business angel will be as excited abut your idea as you are. New business owners can be guilty of valuing their business idea at ridiculous multiples of its value in the real world.
Do some research and find out what values that have been placed on businesses similar to yours when they have received investment or been sold. For more on ways to value your small business read;
2. 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.
3. 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 your plans how you remunerate yourself or your colleagues while building up the business. Angels will not be interested in funding a ‘lifestyle’ business.
4. Make a good impression
Not all investors will be as taken with the “new media” look so many would-be entrepreneurs go for. A clean, simple, professional look is always worth adopting when meeting business angels.
When you’re a successful entrepreneur, you can wear scruffy t-shirts and sport as much designer stubble as you like. Until then, think about your audience, and what would help you to create a good first impression.
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.
6. 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.
7. ‘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 adapt to changes and not simply rely on what you’ve committed to paper.
8. 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 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?
9. 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. By doing so, you are more likely to attract an investor with whom you can connect with.