To be successful in attracting interest and funding from an angel investor, you need to make sure you are well prepared. In this blog, we've gathered some top tips to help guide you through the murky waters of attracting angel funding.
Preparation is key
Angel investors, especially the more well-known ones, get many proposals sent their way. In fact, it’s said many angels receive so many funding applications that instead of looking at who to invest in, they look at who not to invest in. If you’re looking for angel funding, make sure you plan your approach carefully so you don't land on the 'no' list.
For your proposal to be considered, you need to have more than a great idea. You need to have:
- Invested your time and money in your own venture
- A relevant and experienced team in place, for example, if you're developing a finance app, your Chief Technology Officer needs to have outstanding credentials in IT and finance
- A detailed business plan including your go-to-market strategy
- Completed at least one iteration of your product or service and have completed a round of market testing
- Your finances in order. We're not talking bookkeeping! You will need to have an idea of how much money you think you need and how much equity you are willing to give in return for that investment.
- A polished pitch that’s ready to go
Identifying your ideal angel investors
Before you approach any potential investor, you need to identify what your ideal angel investor looks like. Understanding their expertise and interests will make it easier to approach them with an offer you believe they could be passionate about. Things to consider before approaching any angel investor are:
- What does their investment portfolio look like?
- Are they conservative and risk averse or do they like riskier investments?
- Is their industry experience relevant to your business?
- What are their interests?
- Have they invested in similar start-ups, your industry or your competitors?
Creating a list
Use the details above to help identify suitable active angels and compile a list. Attend industry events, ask for recommendations and identify similar deals taking place in your industry. Don't skimp on effort. There's no point wasting time approaching an angel you don’t know and who may be unsuitable.
Cold calling potential investors doesn’t work. Instead, use platforms such as LinkedIn to find connections who can introduce you or attend events where potential angel investors are presenting. Build a relationship with them to help you identify if they are suitable. Use this time to engage them in your venture before you start pitching for any investment funds.
When do you approach potential angel investors?
The search for suitable investors is time-consuming, as is building relationships. Therefore, you need to start the process early. After a while, if you find you get on well with your potential angel and they like what you’re doing, you’re more likely to succeed in gaining their financial support.
Honesty and preparation are critical for success
Increase your chances of success with potential angels by:
- Making sure you are well prepared to field all questions
- Carefully researching all potential investors and then build solid relationships with those angels who appear to be most closely aligned to your business
- Always be honest and open when pitching and/or answering their questions.
PrimaryMarkets offers a global, independent, unlisted securities and investments platform on which buyers, sellers and intermediaries can take part in off-market transactions. Contact our experienced team to assist you in finding unique funding and investment opportunities.