Learn how to attract investment capital just by asking for advice. Experienced entrepreneurs are often attracted to deals within their areas of knowledge. Therefore, tapping their expertise is a great way for them to find you as their next investment opportunity.
Sometimes sending a detailed business plan is the wrong approach toward a potential angel investor. Sure, your business plan is an essential tool that provides a comprehensive roadmap for the near future. But, it also contains details that inhibit an angel investor to quickly make an overall assessment. You need to attract the interest of an angel and then provide the details later.
This is especially important when approaching angel investors in your city. These potential investors are locally successful entrepreneurs. Your optimal investor contacts in this group are those who are familiar with your industry. These individuals have probably heard about you—or can find out fairly easily. They only lack information about the plan for investment capital you’re seeking.
Local angel investors have an opportunity to meet with you later and ask questions. All the answers may be in your business plan already, but first you must inspire the questioning. Starting the relationship requires a brief introduction instead of a lengthy polished business plan.
The initial response of investors when reading about prospective opportunities is non-committal. But you can use this to your advantage by not asking for money right away. Instead, ask them for advice about raising money for your company. This requires an introductory letter.
An appealing letter strikes a balance between flash and substance. State what your company does and who is involved. Then make a connection about how advice from the angel investor is appropriate for your business. Tell the angel that you would like a meeting to discuss recommendations about how investors looking for opportunities like your company can find you.
Include with the introductory letter a one-page summary of your company and the investment capital sought. This is your opportunity to make an impression about your business. Use the summary to show what makes an investment in your company attractive. Break the summary into sections with headings that match key elements of your detailed business plan—company description, industry, market, management team, and purpose of new capital infusion.
Use one or two sentences for every section. But use the most words to emphasize the most impressive aspect of your company. This can be the experience of management or recent successes in the company.