3 Ways to Achieve Angel Funding for your Startup Business
Start Ups are all the rage in the world of business these days. Music albums, independent movies, books, apps, and websites all make use of the startup model. That model generally relies on outside investors for financial support from three sources: Private Equity, Venture Capital, and Angel Investing.
According to entrepreneur.com, “Angel investors are high net worth individuals who seek high returns through private investments in startup companies. They provide similar startup financing as venture capitalists in smaller amounts.” The article continues to define an Angel investor as “typically retired business people who keep an eye out for investment opportunities.”
Perfect the Pitch
Attracting an Angel Investor requires a clear business plan and a perfected pitch. On this article, Zeynep Ilgez, an Angel Investor, outlines various ways startup companies connect with their pitch. The most salient features stress it’s not just about standing out; it’s also connecting to the heart, head, and appearing as more than another gimmick.
Writer and Ilgez recalled a particularly memorable pitch that connected:
“I once saw a pitch for a waterproof case for iPods. The entrepreneurs utilized fun, attention-grabbing tactics, but what I remember most was their unique value proposition and business model, which involved a good sales distribution strategy that allowed faster time to market. They knew exactly how they wanted to build a company around a product they loved.”
With a delicate balance of heart and head, the Startups first grabbed the attention of the investors and then followed through with a vision of the future for their idea.
More Than Numbers
Do not rely too heavily on spreadsheets and graphs when making a pitch. Investors can look at all of the numbers later, before making a decision. It’s more important for investors to see an organized plan for the future than numbers predicting the future. When pitching, it’s important to make slideshows short (10-12 slides) and to keep ideas as simple as possible.
It’s also important to provide a positive chemistry between the management team. As Ilgez points out, “Investors are looking at you and your management team. They know a bad partnership can ruin a business.” Investors ultimately look to invest in an idea and the team’s ability to turn their investment into a profitable endeavor.
It’s imperative investors know how they’re going to get their money back. Most of their trust relies on the Startup instilling trust in the investor’s mind that this idea will turn a profit and make their investment worthwhile.
In 2014, according to this research data, Angel Investments dropped 2.8% in investment funds totaling $24.1 million. However, the number of investors went up 3.8% from 2013, totaling 73,400.
Roman Temkin is a real estate developer and an entrepreneur from NYC.