What Do Business Angels Look For?
Business angels are influenced by a plethora of logical and emotional reasoning when they make the decision to invest in a new venture. This may include something as intangible as a feeling about a business concept – maybe they are having a good day and are feeling generous, or a pitch taps into a childhood passion of theirs. None of these, or a million other reasons why they might invest in your business, are within your control, but we have gathered together a few things you can do to improve your chances of winning business angel funding.
Have a distinctly unique USP
You will need to prove to a business angel that your business has something special, a quality that differentiates it from the competition enough to show that you have either something new or a new way of approaching an established and profitable business. If you present an idea that they have heard a million times before, you’re unlikely to inspire too much wallet-opening. So before your pitch, consider exactly what it is that makes your business a must-have service or product for the buying public, and why it is unique in the market.
Your commitment to the venture
Business angels want to know that you are not going to take their money and have a go, then if it all starts to go wrong just give up. They are looking for how much you have personally invested in the business, both financially and with your own blood, sweat and tears. They are looking for genuine commitment that proves that you will ride this rollercoaster of new business development and have the strength to see it through the tough times.
Your skills, experience and expertise
Do you have a track record in this business, or in fact in running any kind of successful organisation? What were you doing before this? Is your employment history relevant to the market into which you are launching a new business? A business angel knows that there is more chance of success if you have the relevant skills and experience to launch, run and develop the business you are asking them to fund. This is not to say that if you have a fantastic business idea but no experience you won’t find another way of convincing them to part with their money.
Market and competition
Your idea may be unique right now, but what barriers are there to others launching similar businesses or established players expanding into your arena? Patents, trademarks, specialised skills and the expense of setting up are all factors that can stop or at least slow competitors entering your market. Business angels will be interested in hearing exactly why it would be difficult for someone else to simply come along and offer what you are doing better and more cheaply than you can.
Timing
Different markets react differently to changes in the economy. We may be in the depths of a recession at the moment, with companies reporting redundancies left, right and centre, but some sectors are still doing unbelievably well. The fast food sector has recently reported record profits, and supermarket chains have announced expansion and employment plans, to name just two. If you are looking for funding from business angels, be aware of the effects of the economy on the potential of your business so that you can present it in its best light during your pitch.
Profit potential
Some business ideas are fantastic and the concept is radically different from anything that has been seen before, but the question on every business angel’s lips is “but does it make any money?”. Profitability has as much to do with pricing structure, production issues and delivery as it does with demand. Know your figures. There’s nothing more frustrating to a business angel than an entrepreneur with a great idea who has no idea of how they are going to make a profit. After all, that is why most business angels are there in the first place, so make sure you meet their expectations.
OK, now you’re ready to pitch to our business angels for funding to give your business launch a boost, develop your invention or expand your venture. To find out more about what business angels are looking for and when our next speedpitching events are, come to our website at www.angelsden.co.uk.
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