- What angel investors are looking for in a project
- For those starting or expanding a business that needs funding
- Learn more about how you can impress potential investors and impact their decisions
Angel investors can be a valuable source of funding, but it can also be challenging to impress these individuals. After all, they’ll be receiving pitches from numerous entrepreneurs and your proposal has to stand out as one that catches their interest and assures them of success.
Angel investors are usually wealthy individuals who are interested in assisting startups in hopes of earning a return on the investment down the road. Investors can also form groups to pool their resources and pursue opportunities together.
By knowing what angel investors are looking for, you can hone your presentation to increase your chances at winning support. If you want to connect specifically with Connecticut angel investors, check out “Angel Investors in Connecticut.”
How angel investors work
Angel investors typically want to see a considerable return on investment when they invest in a company, seeking out businesses who can create a better profit than putting money into the stock market or other investments. They often want to take a broader role in the business than simply opening their wallet, such as serving as a mentor or having a seat on the board of directors or advisors.
In exchange for their financing, angel investors usually get equity ownership in the company. For this reason, they’ll seek businesses that provide a workable exit plan for investors. It’s unlikely that they’ll be interested in having a long-term stake in the company; instead, they’ll want to know how they can sell their shares and earn a return on their investment, often as a result of a sale or merger of the company.
Research your potential investor or group ahead of time. Some limit their activities to specific states or regions, specialize in limited industries, or only invest in companies that have reached a certain stage or meet other characteristics. You may also be able to get a sense of what interests an investor and whether your idea will appeal to them.
What you need to show
An angel investor won’t take a gamble on a vague business idea. You’ll need to provide information showing that your company is more likely than not to achieve success.
A well-developed business plan is crucial, as this will provide information on the products and services you’ll offer, the potential customer base, and how you’ll stand up against existing and potential competitors. The plan should also include realistic forecasts on the company’s finances, including when you expect to achieve profitability.
You should also make investors aware of the people on your team. You can increase your chances of success if you have a professional group with a diverse range of expertise.
How you present
When making your pitch to an angel investor in person, you should treat it like a job interview. That means communicating clearly and dressing professionally.
Each investor is different, but they are often impressed if you can demonstrate that your company will solve a problem or if they are passionate about their idea, not just eager to secure and generate money. You may also be able to increase your odds of success if you have already found some success on your own, such as building awareness of a brand or establishing a robust customer base.