5 tips for finding Angels – Approaching investors for the first time
We have lots of early-stage startups looking for angel investors in our community, so funding is usually close to or top of the agenda when it comes to conversations at HomeWork Workspace!
Where to start though? Finding an angel investment network can be difficult. In the early days many startup founders use their own money or turn to friends and family for initial investments. However, finding accredited angel investors is essential to take your business to the next level.
A workspace in your local community is a great place to start in finding angel investors, a hub of the startup ecosystem, many businesses in the space will have connections to accredited investors. The space itself will likely host events to afford their members the opportunity of meeting investors or those with industry experience, or offer workshops to help in preparing a business plan, pitching or approaching angel investors.
But once you’ve got an in – how do you prepare? What factors do you need to consider to raise angel capital? How do you approach investors? Here are some of our tips for those considering approaching angel investors for the first time…
1) Research your industry thoroughly
It’s really important to know what the market opportunity is, how big it is and how well trodden the path is already. If it’s small, how do you plan to get noticed?
Your business plan should include a thorough sense of your competition. A competitive landscape shows that there is clearly a market to be tapped. Potential investors will want to know you’ve considered this thoroughly and are not afraid to have a candid conversation about it.
Focus on your USP and the key differences between you and your competition. How will you attract an audience, market, sell and retain them to a higher standard than your competitors?
2) What problem do you solve: Why would anyone buy from you?
It’s simple – people will buy things if they solve a problem for them. It’s the value of the solution to them that’s key. Understanding your customer’s perspectives will be something that any investor will want to know you have a good grasp of.
What’s your USP and how well articulated is this to your market? Make sure that your USP makes you clearly stand out from your competitors, and it’s something that you put at the forefront of your sales pitch.
Angel investors want to see that you have a solid plan for growth and that you’re not just looking for a quick cash infusion. Be prepared to provide a detailed growth plan that outlines how you plan to scale your business and increase revenue over time. This can include expanding your product or service offerings, entering new markets, or increasing sales and marketing efforts.
3) Returns on investment: Both in terms of amount and timescale
Be really clear on how much you’re asking for and what you are giving away in return.
- Is it equity or debt? If it’s equity, equity in what?
- Will they get shares in a limited company? And how many?
- When will they get their money back and how much will they get?
All of this will be derived from modelling the revenue and costs of the business over the short and medium term. If numbers aren’t your thing, get some help. There are lots of great companies out there that provide services helping with pitch decks and financial models. Good finance support companies will also do this for you.
Different investors will have different investment sizes in mind. Investors often want to invest larger sums so they have the opportunity to make larger returns. Don’t be afraid to think big!
4) Be concise
Remember that investors see hundreds of pitch documents and listen to hundreds of pitches. They don’t have time to read through mountains of text or listen to long monologues, they want to get to the key bits of information fast – make it easy for them in both your written deck and verbal pitch.
5) Remember, investors are investing in you
Sure there has to be a good idea / product / service and there has to be a great market opportunity to make the investment financially attractive, but above all an investor wants to like and trust you.
A great founder should be able to make a success of any business. So if you’re preparing a pitch deck don’t hide the section on ‘team’ at the back. Make sure it’s up front and gives a good sense of who you are. This will ensure you find the right person for you and your businesses.
At HomeWork, we are launching quarterly pitch events to allow our community to seek advice from experienced investors and pitch their business.
There are plenty of other organisations that offer these kinds of opportunities as well. Register for a few and start to build a picture of how to approach seeking investment. They will also give you an opportunity to network with a community of people who are looking to do the same or have connections that may help you. As always, be proactive!
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