Angels Den Blog

So you have got a great idea and want to make a successful business of it?

You may feel that your product or idea will be sufficient in obtaining Angel Investment, however, the reality can be somewhat different.

Seeking funding for a new business venture can be a difficult and time-consuming process. However, there are a few tips that may help to make the process an easier and more productive one.

The Business Plan

Firstly, and most importantly, you need to have a well thought out and thorough business plan. As the first source of information for potential funding, the business plan is crucial in getting initial attention and interest from the Angel Investors. It needs to clearly reflect your vision and goals for the business, how the money invested is going to be spent, as well as how it will benefit the business and its potential funding providers. This gives you the opportunity to highlight your management ability and financial forecasts.

The Pitch

The pitch is also extremely important as it can make or break your chances of receiving funding – remember first impressions do count. Practicing the pitch is essential as you need to be prepared to answer the possible concerns investors may have, whilst providing a concise and engaging summary that doesn’t give away all ideas. It also needs to steer away from all jargon. Stick to what you know!

Even though Dragon’s Den may be a fabricated event created for a television audience, and more about entertainment than the true process of Angel Investment, there is a degree of similarity. Professional Angel Investors who are active with Angels Den tend to more laid-back so don’t expect such a grilling. Also don’t forget there won’t be a TV crew there whilst you’re pitching for Angel Investment.

Be Yourself

Angel Investors want you to be yourself. Whilst they know you are passionate about your business, it is more important that you are rational and realistic with your company’s financial and sales forecasts. No one wants to work with someone who isn’t grounded.

It’s All About The Detail

You need to be able to professionally present credible and detailed information relating to the current and potential capital, financial forecast, cash flow forecast, as well as how investments will be managed and what involvement there will be. Investors will want to know what sales you have already made so they can interpret the business’ potential.

How Much Of The Business Are You Offering?

Not only do you have to be realistic in terms of your financial forecasts, but also in what percentage of the share capital you are offering for your desired investment sum.

If you are offering 30% for £100,000 is your business really worth £333,333? Can you back it up with figures?

What Purpose Are You Seeking Angel Investment?

It is also crucial that you know exactly what you want the funding is going towards and why your business needs funding? Are you using Angels to gain greater coverage in terms of their contacts and networking or maybe for their expertise in the field you are entering in to? Investors prefer to know up-front why you have chosen them and let’s face it, they don’t want to hear it’s just to use them for their money!

Are You Prepared To Be More Indebted?

You will need to be up-front regarding the company’s financial status and what levels of debt you have tied-in to the organisation.

Releasing Some Control

Are you actually prepared to have others having a say in how the business is run? Angel Investors tend to have decades of experience in business, and with their own money often being invested, would you be willing to work with an Angel Investor who has a degree of say of how the business in run?

Is Your Idea Original?

Another major factor that you need to take into account is that whether the design of your product or idea is original, has patents and importantly that you own the original design?

Angels prefer to protect their investments. Having a patent can make or break a deal. If patents aren’t present there is often no reason why other companies can not take your business idea and produce the product themselves. This would reduce the value of the Angel’s investment.

Be Aware Of Your Competition

Are you realistic about your competition? You would need to consider how they will react when you launch and market your products. Will they try and keep you out of the industry by lowering their prices, will they increase their marketing spend, or will they launch new products? The market won’t be static in the face of you entering it.

Are Angel Investors The Last Option?

Potential investors will also want to know whether you have approached any other type of funding before them and why you have chosen this method, particularly if you think your idea is so groundbreaking. They need to know why the venture is appropriate for the type of external investment they are involved with.

Angels will also wish to know if you or your family can’t provide the funds yourselves.

There Is No “I” In Team

Angel Investors also like to see that you have a team behind you that are committed and determined to make your business a success. Angels not only invest in the idea, but also the people.

If you have found the information useful then you can register as an entrepreneur here.

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