When you are initiating your business, you will instantly need a good amount of investment. This need can fulfill an angel investor who can invest and raise funds for your business. This is a good idea if you know how to approach angel investors. In this article, we will clarify all your questions related to how to approach angel investors, how to use the angel list to approach angel investors, etc.
Elements you should have before approaching angel investors
Investing money in someone else business is very risky to work. Therefore before investing in a business a person analyzes all the aspects of such business. Same the case with angel investors. They take a detailed tour of the business before investing anything in such a business.
Keeping in mind all of such things we have developed all the necessary elements which should have in a business to attract individual investors as well as groups of investors for long term investment.
Have an experienced Team
There are hundreds of companies startups in a year. What’s very clear in terms of what’s important to angel investors is the team.
Companies get an evaluation of people’s product market. So people are key. It’s very difficult for investors to invest in a solo practitioner. So surrounding themselves with people who are knowledgeable in their domain who complement their strengths is crucial for the success of a company seeking funding.
Know your current business plan
It is an important factor from the angel investors’ point of view as they want the good health of your business. It can only be possible when you have every inch of knowledge of your business.
A founder must be familiar with every aspect of their business plan. Often founders will seek assistance from outside experts or advisers, but they must become familiar with all of the resulting content because the investors are going to be questioning them, not questioning the advisers. So we’ve seen many companies, many founders, blunder because they’re not familiar with the financials or they’re not familiar with the go-to-market strategy. All of this is devastating in terms of their ability to recover from that mistake.
Realistic forecasts are crucial to an early-stage company looking to raise money, and those forecasts have to be realistic for the first two years. No investor is going to look at an early stage startup and expect them to be realistic for five years.
There are going to be modifications based on what the market feeds back. So a very realistic and executable forecast for two years is what we recommend.
Be ready for due diligence
Not every startup is prepared for what they’re asking for, so they go out and they ask for money from strangers. But they haven’t done their homework and that homework is becoming prepared for due diligence.
Due diligence means that their business plan has to be current. All of their contracts need to be assembled in one place. Their books should be current. And so is really in a founder’s best interest to get all that material together and ready before approaching anybody for investment.
Five Different Keys to Find Angel Investors
A key thing to understand here is that angels don’t fly alone. They like working with each other. That means, when you break the ice to one angel, you can jump to other angels, too. Let’s go through the five strategies to find amazing angel investors.
1.Through Online Platforms
There are plenty of online platforms that can help you to find a good angel investor for your business. Honestly, all of them are not perfect. They’re good if you use a combination and filtration, you are likely to find something.
2.Tracking the Groups of Angel Investors
Every big city has these groups of angels. They like working together. As I mentioned above angels don’t fly alone. So you will find them in the form of different groups.
The thing you only have to do is just reach out or trace down one angel investor.
There are hundreds, maybe thousands of these groups all over the world. The thing is, with these groups, if you can’t find them, of course, you’ll just Google them, how to approach angel investors. But you could also just ask the first angel to meet. Even if the angel isn’t a part of a group, there’s a very, very good chance he knows the local groups.
So ask around and you’ll find these groups. They like to work together because they learn from each other.
They will pass deals with each other that match others better. But they’ve also pooled their money together to give them more power. So now they can make bigger investments together.
3.Events and Meetups
This is about going to these events and telling as many people as possible that you’re looking for foreign investors. Some people like to do this with lots of people there. There is a good chance that somebody knows somebody.
So look for these events locally. They could be pitch nights, some kind of startup night networking stuff, go out there and tell a story.
There are quite a few angel investors are elected when I went three levels out in my network. I found 6000 different angel investors.
So LinkedIn is a good tool to identify potential angels. When you find somebody, you should try to get someone to introduce you.
In many cases, you won’t be able to find somebody who knows them. Then you’ll have to contact them directly. But if you can find instruction, you should be aware that any angel investor on LinkedIn will get a lot of inbound mail.
They will get messages from everywhere and it could be tens a day. So massive amounts. I’ve heard angel investors tell me that they took out the Angel investor title because they got so many messages.
So some of them might even be hiding there just because they got too many messages. When you reach out to these angels, make sure you’re short and relevant, go very precise. Tell them why you think they’re the right investor. But keep it short.
5.Introduce your Story
It’s very important to tell everyone about your story. Tell everyone that you’re building this amazing startup and you’re looking for an angel investor.
Even people you’re pretty sure to want to invest because you don’t know who they know. So the key here building an amazing short story that you tell all your social events, you know, socially, online, wherever you go. So people know that you’re looking for this to work going back, you must have a great story.
Make sure you have a great elevator pitch that you can tell people and they can tell everyone else to finally make sure you use as many of these strategies as you can. Some will work some will not. But if you use as many as possible, it’s much more likely that you’ll find an amazing angel investor.