|
Setting Angel Snares: Ten Tips For Appealing To Angel Investors
by Ty Freyvogel
If you are ready to start your own business, but need additional funding to get it going, an angel could be the answer.  No, I'm not talking about the kind with shimmering wings and a spark of divinity. (Though having that kind on your side can't hurt, either!) Angels are private investors who finance start-up businesses and new business explorations with their own money. Usually, they have been entrepreneurs themselves and delight in helping start-up or even established companies grow toward success. There are countless angels out there just waiting for a worthy project to fund. Why not yours? You can easily find your own investors if you know how to approach them and sell your ideas. Read on to learn ten tips for appealing to Angel Investors.
1. Perfect your pitch.
The pitch is the product or business idea that you will present to your potential angel. It should be well thought out and fully developed. Remember that the pitch will provide the investor's first impression of your project, so it needs to be powerful and convincing. Your pitch can either impress him or bore him. Obviously, you want to go for the former! Preparation is the most important factor in a powerful pitch, so practice, practice, practice.
2. The big picture is bigger than the product.
When you pitch your idea to investors, remember that your product or idea is not as important as the background work you've done. Spend time thinking about not only the selling points of your product, but also the strengths of your work team and any marketing information you may have already collected. Note the accomplishments of your team's strongest members and study the competition that you will be dealing with. Remember, angels have usually already been entrepreneurs. They will be impressed by your initiative and by the fact that you knew to research the above elements.
3. Keep your pitch plainspoken and dynamic.
Strike a fine balance between being informative and clear and exciting and energetic. Angels want the facts, but they also want to be inspired. You want your pitch to briefly explain the product you will sell or your company idea.. Do not use big flowery words meant to impress them with your erudition. (See . . . don't use a word like "erudition"!) Most importantly, don't lie or exaggerate. Investors will learn the truth and then they won't support you. You also need to remain calm. If you are not a good speaker, bring a member of your future team who is a people person. Being nervous and awkward won't help your cause.
4. Remember that angels invest in people more than ideas.
Improve yourself. It is not uncommon for investors to become very active in the life of your company. Therefore, they will be more likely to invest in energetic, friendly people. So if you are not a kindhearted, likeable person, become one...now. Read a classic book like Dale Carnegie's How To Win Friends and Influence People or take a self-improvement course or just research people skills online. Seriously. Work on becoming a better person and you will be much better equipped to woo potential angels.
5. Confidently approach angels with the assumption that they want to help you.
Remember, angels have been there! Most angels were once entrepreneurs themselves, starting at the bottom and working their way up. They take personal satisfaction from helping new business owners make their own dreams come true. So don't worry. You are not imposing on an investor by asking for money. They really do want to help.
6. Know which angels are appropriate for your company.
Some angels make it a rule to only fund start-ups, while others prefer to help companies that are already established expand and develop new avenues of the existing business. Associations exist solely for the purpose of helping entrepreneurs connect with the appropriate angel. Ask around. Do your homework. And don't try to fit a square peg into a round hole.
7. Pony up the dough.
Investors want to see that you believe in your own product, and nothing talks louder than money. It is mandatory to put some of your own cash on the line. Angels understand that you don't just have millions lying around, but they will expect you to put up some of your own net worth (the going rate is about 20%) toward your business before they contribute. Dip in to your savings, or if you have to, put your house on the line. When you are willing to risk your own assets, angels will know that you are a worthy candidate.
8. Stay in your own backyard.
Angels often want to be actively involved in your business so you need to seek an investor who is relatively close to you, geographically speaking. If possible, seek out investors who live within 50 miles of you. Like a nervous parent who likes to unexpectedly "drop in" on her child's daycare center, your angel should feel free to check on you at any time. If you're within driving distance, it will be easier for her.
9. Look for risk takers and "live it up" types.
Angels are generally quite wealthy and-by their very nature-enjoy taking risks. The same impulses that led them to be successful in their own ventures also shape their leisure pursuits. The combination of a) plenty of discretionary income and b) a propensity to adrenaline rushes means you'll often find them climbing Mount Everest or participating in some other extreme sport or adventure. So if you meet someone who just went on a month-long tour of Nepal or rode along on an African Safari, keep him in mind as someone who may be willing to throw a little extravagance your way.
10. If you don't desperately need an investment, you are more likely to get one.
You know the cliché "It's easier to find a job when you have a job"? The same principle holds true here. Proving that you have the ability to get the business up and running on your own will be a big encouragement for potential angel investors. Create a steady customer base and stay current on all of your bills. Then pitch to an angel that you would like their investment in order to further develop and grow the company. Your prospective angel will be impressed by your independent progress and will want to help your business become bigger and more profitable.
Remember above all that angels are people too. While investors do have the money and power to fund your business endeavors, don't be intimidated by them. Just prepare your business plan and your pitch and approach them with the same enthusiasm that they approached their own businesses when they were in your shoes. They will respond very well to an entrepreneur who is prepared and confident about her future plans. Most of all, know that they want to help you. Make sure you're a worthy candidate, set your snares well and go catch an angel of your very own.
|
