When you pitch your company to an angel investor, you already know that the experienced are more likely to invest. So you’ll want to remember that experienced investors also are inclined to prejudice about entrepreneurs. Having dealt with so many new corporations, the angels are simply conditioned to expect certain behavior. If you make sure to address these prejudices head-on, you will stand out from other entrepreneurs seeking capital.
The most significant thing angel investors have learned from entrepreneurs is that they embellish the facts. The bad entrepreneurs say easily verifiable lies, but the seemingly good entrepreneurs also have a tendency toward dishonesty.
Companies raising money require good relationships with the investment community. What early stage investors say about you impacts your ability to obtain further funding in the future—especially from new sources. Be honest about your company’s cash position, the funds required to obtain stated objectives, and actual recent progress made.
Something else that raises eyebrows among angel investors is when entrepreneurs project unrealistic amounts of revenue. Tell investors exactly what’s required to obtain the revenue in a projection. What personnel are required. What outsourced services. What facilities or equipment.
Most importantly, don’t count the revenue in your cash flow projection before it’s received. That is, show how much you have to spend first in order to have the income later. The cash you account for this month probably required spending money last month. That’s why you need the investors. They know this and you should clearly display this understanding yourself.
Always remember that an angel investor is judging you as a person. There are plenty of good business ideas. But, investors want good entrepreneurs who can take an idea and make money from it. By showing investors that you deliver the whole truth, you’ll stand out from other entrepreneurs. This gives angel investors confidence that investing with you embodies the best shot at making money.