How to Approach Angel Investors Successfully
How can I grow my business? How can I raise enough capital to build up my business? Should I have already raised capital on my own or should I look for help from other wealthy people who will step in and invest in my business? If you already have these questions in your mind, this article is for you.
If you are having troubles getting funding for your business, then you probably have already been into the world of angel investors, but let us start from the very start.
So, who are angel investors in the first place?
According to Investopedia,
An angel investor (also known as a private investor, seed investor or angel funder) is a high-net-worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company.
Angels are individuals who invest their own money and -in best case scenarios- expertise in a specific field to support startup businesses and innovative projects especially in their early stages.
Angel investors can be a great asset for starting your business/project and they are actually becoming an essential part in building and growing any business; however, some entrepreneurs might get nightmarish when the word angel investor is brought up and this is due to the misunderstanding they have built up about angel investors back in the day, and to be honest, it can be such a challenge to get in touch with investors and convince them to fund your project.
Most entrepreneurs find it difficult to approach and succeed in approaching angel investors, so if you are one of these entrepreneurs, here are some tips that will help you find the right angel investors for your business:
1- First make sure that your business profile is good enough
Angels are investing their own money, so they want to make sure that they are investing in the right business and not wasting their hard-owned money on projects that might not be successful in the long run.
Therefore, build a strong profile before pitching to your potential angel investors, and make sure that you have enough experience and knowledge under your belt.
A strong good profile of your business showing the features of your products, the financial statement of your business, your business management, your highly skilled and passionate employees, and finally where your business stands in the market, are necessary to catch investors’ attention and make them willing to invest in your business.
Make sure your pitch deck reflects how good your business actually is content-wise and form-wise. How professional your pitch deck is will say a lot about you as a founder/team and how much thought and effort you have put into the business.
- Frequent angel investor events
Showing up on the scene is very beneficial for you to attract angel investors who are actively looking for the next business to invest in. This can be done through attending events whereby entrepreneurs have the chance to meet up with investors face-to-face. On the top of that, being social and having many connections are great ways in asserting your presence and promoting your business. Getting around and immersing yourself as much as you can and introducing your business to investors on a large-scale basis is key.
Furthermore, attending online events can be a great way to spend your quarantine or non-quarantine evenings making new connections and networking with investors and business experts – even if you are too lazy to leave your bed.
- The power of connections
Finding angel investors directly is tough because some of them tend to keep their profession and strategies for themselves in order to avoid constant hassling.
Sending a cold call via LinkedIn, Facebook or Twitter to an angel investors might work sometimes but it is not a great solution at all.
In most cases, you need to be referred to an angel investor. It is always better to have a third party or a consultant who can introduce you to angel investors. This uppers your chances of getting funded considerably.
It’s not an easy task to find angel investors who are willing to listen to you. Therefore, make sure to get social on social media and navigate through the right websites and platforms but to maximize your chances, be smart in your research and know how to look up the right investors.
Finding angel investors online can be achieved in many ways. You can easily start by Googling it. You can Google “investors’ network in [country]” or “investors’ network in [industry]”. You can also do that by searching for businesses similar to yours that have raised capital, (or scored major funding) and go through their profiles and have an idea about how they successfully raised the capital needed.
Here are the most popular websites for angel investments:
Also, you can check crowdfunding platforms whereby many startups have profiles that angel investors can navigate through.
- Avoid inaccurate info and miscommunication at all costs
Be realistic and don’t overestimate your business. Being real in your profile showing accurate facts and real statistics of your business and basing the valuation of your business on measurable success is your way into having credibility in the eyes of investors. Because investors want to know the position and the valuation of your business in the market and where your business is actually heading, to make sure that their money is in a safe place. They are also interested in having and maintaining a healthy relationship with you – as a founder – based on trust and transparency.
Watch a few episodes of the Dragon’s Den and you will be utterly convinced of the importance in having an honest and truthful way of telling your story and your business story.
- Start with next-door investors
Since your business needs constant working and developing, it would be great for you to look for local investors who live nearby to avoid the trouble of all the miscommunications that can result from online and far relationships. This won’t be for your own good only, but will be good for your investors as well. Since your angel investor would like to be part of your business focusing constantly on the work and the progress you are making, being a local business is to your advantage.
Starting chats with investors and having conversations with them will let you know more about how they think and consequently build a better way of approaching your potential investors more successfully
- Create professional and catchy documents and materials
The materials you are using might be the bridge between you and the angel investors you are contacting. Make sure this bridge is solid enough.
When contacting investors, many of them will start by checking your documents. The first few pages are enough to make or break the deal.
If your team is qualified enough to make these documents; the pitch deck, the business plan, the financial forecasts, etc. then fair enough. If not, make sure you are getting the support you need in making your startups’ documents. You can also make use of investors’ feedback on these documents and their impression.
Having the right documents is not enough; you also need to have the right skills in presenting them to whatever funding source you are approaching.
In conclusion, finding the right angel investors for your business isn’t an easy task as it requires a lot of effort and dedication to find the one, but following the steps mentioned above and having a strong plan and a catchy idea/product, will be helpful in achieving your goals and getting funded by angel investors successfully.