Key elements to consider when raising money from Angel Investors

As an entrepreneur under 30 with a new startup, raising money can be an exciting and pressure filled experience.  Many have to manage feeling the need to prove themselves to supportive friends and family members, more importantly to themselves.  A successful raise communicates credibility and tells everyone around you that you are not crazy. Ensure that you provide information to help Angel Investors make a buying decision.

Who are Angel Investors?

Who are angel investors?

Angel Investors are investors that are typically focused on helping entrepreneurs get started. They are sometimes called friends and family, private investors, angel funders or seed capital, but are not venture capitalists.  As high net worth individuals, Angel investors have usually been in business for themselves, ran a business, bought and sold businesses and invested in growing businesses.

As a result, many Angel Investors will come with preconceived notions or beliefs that they have developed over the years, and some that are very different than someone under 30 looking to challenge the status quo or do things differently.  They are content, however, to give some money to test a product or an idea, or to support a relationship.

What do Angel Investors care about?

While they are said to care about helping entrepreneurs get started the overall guiding priority is usually not to lose money.  Having made enough money to be able to invest in startups has taught Angels “rules” about money and not wasting money. Startups should be mindful of the mindset as no one likes to lose money, even if you have a ton of it in savings.  

In a 2014 Inc Magazine Article, it was discussed that of the five main things Angel Investors want to see the first two big ones are: The TEAM and the BUSINESS PLAN. Just like entrepreneurs looking to prove themselves for credibility so do Angel Investors who look to discuss with others their wins and their losses, and losing credibility when investing in losses, or investing without a solid team or a thought-out simple business plan.  Enhancing your bank balance or your reputation impacts how, when and why and Angel Investor will help fund a project.

Do you have a business plan to pitch to Angel Investors?

How to prepare for Angel Investor Meetings

One well known Angel Investor Group worldwide that I am aware of is the Keiretsu Forum (http://www.keiretsuforum.com), and I know there are others. Groups like these help both investors and startups through the process of raising funds.  

Some key takeaway points to consider when preparing for an Angel Investor meeting are:

• Ensure you have a 1 minute, 6 minutes, 20 minutes and one-hour pitch available to you – practice your presentation in those time intervals.
• Have a corporate presentation that fits within 12-17 pages (not including legal disclaimers) – less is more as you want to encourage questions.
• Emphasize your “team” and their biographies, or your plan to build your team or your upcoming meetings and/or targeted board members and/or mentors.
• Talk about how you have a business plan for the year-18 months, and that it is flexible to allow the business to “pivot” as things develop in order to maximize value for the company and ultimately shareholders.
• Make sure you wear a tie, socks and a belt as most Angels (not all) are older and see many CEOs without a tie, a belt or socks on, and doing this will communicate you are different or care about your reputation.
• Be yourself and have fun, let your attitude shine, don’t be someone you think Angels want you to be (other than dressing per my comments above).

For more information on the above or help with anything related to your startup or to have your pitch reviewed by legal or if you have any feedback please contact us or check out our resources page on our website.