Spring Special: $0 Incorporation Service

Demonstrating Your Value to Angel Investors

Posted On:

Startup companies tend to incorrectly believe that finding investors is a difficult process. Actually, angel investors usually have money available for which they can’t find good business opportunities. In order to stand out as a viable investment, entrepreneurs simply need to focus on a few essential elements.

The first step is having a solid concept of the value provided by the business. You must concisely state in one sentence the problem that confronts the company’s customers and how the company provides an affordable solution.

The next communication to investors is real evidence of the market size. Investors need to know how many customers exist with the particular problems that the company solves.

By far, the most important component to success is the people involved in the project. Entrepreneurs are more likely to attract angel investors by focusing on the management team rather than technology. Convey the experience of each team member. Show how they interact. Don’t avoid any gaps in skill. Address those attributes that are lacking and the plans to attract this talent in the future.

Expect angel investors to help with a leadership role. Revealing how this benefits the company is reasonable. Consequently, a feedback mechanism is required to provide updated information to investors. A few of the questions on the minds of angel investors are: How frequently does the board of directors meet? Who prepares the financial statements? What financial controls are in place?

Your business plan is easier to read by limiting it to around 25 pages. Make sure you avoid repetition and typographical errors. Use a professional copywriter. Financial projections are a must. Don’t skimp on these. Hire the financial expertise necessary to compile a pro forma balance sheet, income statement, and cash flow. This is a challenging task for an entrepreneur to accomplish alone.

The projected financial statements must all tie together. If you don’t know how this works, using a financial consultant helps you learn this skill while the pro forma is prepared. You must know your way around financial statements in order to understand both business projections and eventual results. Knowing all the answers for investors doesn’t end after obtaining the initial investment.