One way of securing investment for your company is by finding and using an Angel Investor. These are people (usually entrepreneurs and successful businesspeople) who have money to invest. The funding these angels provide can range from a few thousand to millions.
In another post we will look at how to find an Angel, and how to impress them so much that they will make an investment in your company. But before we do any of that, it is perhaps worth ensuring that you are not laughed out of the room when you approach this particular source of funding.
These guys are serious about money, and having the perfect package will give you confidence when it is time to step up and tell your story. So this post is all about making sure it is worth your while approaching an Angel.
If you can say yes to all of these questions about your company, then you have a strong case for investment from an Angel.
- Is your product selling, right now? If it isn’t, why would they invest?
- Have you got a rock solid management team? Even if it is just you?
- Can you sell? Sales make bottom line.
- Does your company compel people to buy? In other words, do your customers buy from you for strong reasons? Is there an angle that people can’t resist?
- Is your product so different that it will take sales from your competitors? In other words, will your product or service be so different that it will potentially disrupt the industry?
- Is your business likely to make millions one day? Don’t forget that Angels are using their money. ROI is more than important, it’s necessary.
- Have people already invested in your company? If they have, you have earned credibility.
- Is there a clear exit strategy? Can you see an IPO in the future, or an acquisition?
- Can you offer transparency? In other words, can you demonstrate how you will communicate regular updates to investors?
- Have you or anyone on your team made successful companies before?
I think that last point hammers home how Angels really want to be able to invest serious money into serious prospects. If you don’t quite understand this concept, think Dragons’ Den, or any of the other shows where people try and gain investment.
You don’t have to answer ‘yes’ to all of these to be successful. However, the more boxes you can tick, metaphorically speaking, the better the chances you have.
Angels can and do invest, but only if they see a realistic company with real potential. Spend some time on these questions and see if they work for your company. If they don’t, make them work, or find plausible reasons why not (after all, this may be your first company). But it is pointless to try and ‘find an Angel Investor’ without doing this kind of homework.
We’ll look at finding your Angel in a future post.
This is a guest post by Sahail Ashraf, a freelance writer living in Devon, England. His blog can be found at http://www.smarthomeworker.com.Email This Post