Money Monday: 5 Tips for Securing an Angel Investor?

November 7th, 2016

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Securing an Angel Investor can be a smart way to start a business. Have you ever thought about it?

What’s that? What’s that you say? “What is an Angel Investor?”

Well, now, let’s see if we can explain this one.

What Is an Angel Investor?

The term “angel investor” actually originated on Broadway when a wealthy person would give money to fund certain theatrical productions. Angel Investors invest in small business startups or entrepreneurs. The investment maybe be a one-time sum or an ongoing payment to help move the company forward through the difficult first years. To become an accredited Angel Investor, a person must have a net worth of at least $1 million and command an annual salary of at least $200,000.

Tips for Securing an Angel Investor

The bad news is that Angel Investors get pitched daily. You’re dealing with people that are already busy and likely have multiple irons in the fire. 90% of pitches from startups just like yours are being rejected.

The good news is that with just a few tips about securing an Angel Investor, you can set yourself apart from the rest. Let’s get to it!

1. Create a dream team.

Angel Investors are more likely to choose you for your ideas and your people. Create a team that is capable of delivering on the mission of your business. Team members should complement one another. If your startup is a tech company, a good rule of thumb is to have one founder be incredibly business savvy while the other is highly technical. The qualifications of your team as a whole should display the ability to do the job through thick and thin.

2. Have a plan.

If you are serious about securing an Angel Investor, then your research and development should be complete. You should be able to demonstrate that your idea is viable in today’s market and sustainable for the future. Most likely, your investor has years of experience bringing new products to market, so yours better be like nothing else and/or fit the standard to the last detail. Your plan must demonstrate such. No plan, no funds for start-up.

3. Listen.

Listen to everything your investor has to say. Again, they have experience with everything it takes to bring new businesses, products, and ideas to market. There is much you can learn, grasshopper. Sometimes, your investor will be opinionated and it might seem like you’re not getting anywhere fast, but that is the time to sit back and take a long look at what there is to learn.

4. Know/target Angel Investors in your industry.

This will take time as networking often does. You need to get acquainted with and in front of the influencers and/or potential investors that are relevant to your industry. LinkedIn is actually a crazy good tool for accomplishing just that. You can at least use it to find out who the big kahunas are in your sector. By rubbing elbows with these people, you are approaching them with a warm introduction rather than a cold call. That will be much more effective for you in the long run as you attempt to secure funds for start-ups.

5. Know your stuff.

This is the most important tip. You better know your business inside and out and be able to answer pretty much any question that could possibly be asked in regard to it. Everything else is moot if you don’t know your stuff. If you’ve ever watched an episode of Shark Tank, then you know how important it is to know the data. Potential investors will ask you about profit margin and sales numbers. Don’t stumble here. Know your numbers:

  • Profit margin
  • Sales in dollars for the past year
  • Gross profit
  • Expenses
  • Balance sheet
  • Income statement

Study them, know them.

Wrap Up

These tips are great for pursuing any investor, not just securing an Angel Investor. Be patient. All of the above will be greatly time-consuming, but worth it in the end.

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