October 28, 2011 Leave a comment
2. Figure out the least you need to get to the next stage and raise that amount. Then you’ll have to give away less equity.
3. Always ask for feedback after pitching your company. You can learn from each investor that says no, and improve for the next time.
4. Try to invest some of your own money in the business. Angel investors like to see financial commitment from the management team.
5. Have business plans and pitches of various lengths (e.g. 50 words, 200 words, 500 words, 1,000 words, 2,000 words and the full plan).
6. Make sure you can explain exactly what your business does in under 30 seconds.
7. Remember that investors will want high returns, due to the high risk nature of angel investing. Of every 12 companies they invest in 1 might be huge, 2 might be good, 3-4 will be marginal, and the rest will fail.
8. Never tell an angel “the product will sell itself”. It won’t! An investor wants to see a clear USP & well thought-out sales strategy.
9. Be enthusiastic – Investors expect energy and dedication from entrepreneurs.
10. Angels like to invest in deals with other Angels who have done this before and learn from them to get started
11. Make the most of social media – it’s free and a great way to get yourself known in your sector.
12. When pitching for funding, don’t get bogged down in technical details, or you’ll lose the investor’s interest.
13. The management team is one of the most important factors for angels. Consider what skills you and your existing team have and what needs to be brought in.
14. Angels look to invest in strong markets. You can fix a lot of things about a business, but you can’t fix a bad market.
15. Keep your pitch short and sweet, so the investors stay interested and are keen to find out more.
16. When you read your business plan, put yourself in the investors’ shoes. Ask yourself: ‘Would I invest in this business?’
17. Make sure your business plan isn’t too technical and that anyone can understand it.
18. Don’t be afraid to ask the investors questions about their background. They should be keen to impress you and willing to answer any questions you might have.
19. To reassure investors, get someone in your team who has successful experience with start-ups and exits.
20. If possible, approach investors with a working prototype. Investors like to see, touch and test what they’re investing in.
21. Use facts and stats rather than personal opinions. “I think this market will grow” isn’t as powerful as “This market has grown 30% annually for the last 3 years”.
22. Positive feedback, customer lists, presales and letters of intent are very useful when trying to convince investors.
23. Join an association in the field in which your business operates. This will give you great networking opportunities.
24. Decide exactly what you want from your angel: money, contacts, industry experience, entrepreneurial experience, etc.
25. Investors will expect you to have a very good understanding of your competitors.
26. Avoid general statements, such as “We will provide excellent customer service” or “I am very hard working”. Everyone could make these claims.
27. Do due diligence on any investor you’re thinking of doing a deal with.
28. Try to target angel investors with experience in their industry – their expertise will be invaluable.
29. Expect the angels to want an active day-to-day role to share advice, knowledge & expertise.
30. Ask for a non-disclosure agreement to be signed if there is any information you feel uncomfortable disclosing to the investor.
31. Remember no legitimate investor will ask you to pay money.
32. Be completely open from the beginning. If an investor finds a skeleton in your closet, the deal will be off.
33. A market with high growth potential is very attractive to investor.
34. Start your pitch with “a hook” – a statement or question that grabs the investors’ attention and makes them want to hear more.
35. Don’t write “No Competition”. There is always competition, even if it is indirect competition.
36. Be enthusiastic – Investors expect energy and dedication from entrepreneurs.
37. Don’t use acronyms – people outside the industry won’t know what they mean.
38. Gestures, body language (e.g. nodding and smiling) and confidence are very important when you’re speaking to investors.
39. Ask family, friends and colleagues for feedback about your business plan and pitch.
40. The more you practice your pitch, the more relaxed you’ll be when you’re in front of the investors.
41. It’s really worth spending money on a good lawyer.
42. Don’t be afraid to admit your weaknesses and admit you may need help in certain areas or strengthen part of your team.
43. Use short paragraphs, bullets and lists: This makes it easier and quicker for the investors to read.
44. Don’t write “Guaranteed Return”. No return is guaranteed!
45. Check your business plan for spelling and grammatical errors they make you look unprofessional.
46. Don’t say “My projections are conservative”. 90% of companies say the same thing.
47. Make sure you have legit market research to back up your claims about market size and competition.
48. If applicable, investors will want to see that you have the necessary patents and protection in place.
49. Don’t say “We only need a 1% marketshare to have a turnover of 1 million” – financial projections don’t work like that.
50. Last but certainly not least, visit Mike Lebus’ LinkedIn profile and follow his sage advice.