Are you looking for some extra financial help for your startup company? In most cases, building a company on your own is not feasible. Unless you have saved up lots of money or have outside funding, making a living while growing a company is extremely challenging. For this reason, many startup founders seek out angel investors.
Angel investors are individuals who invest their own personal money into early-stage companies in exchange for equity. In other words, they give you the funds you need to get your business off the ground in exchange for a percentage of ownership.
While angel investors can be a great source of funding, they can also be difficult to convince to invest in your company. Since angel investors are putting their own money on the line, they are understandably picky about which companies they invest in. So, how do you make your company more attractive to potential angel investors?
Here are a few tips:
Before approaching an angel investor, it is important to do your homework. This means researching the specific investor you plan on approaching.
- What do they usually invest in?
- What is the size of their typical investment?
- What kind of companies do they tend to avoid?
Being able to answer these questions will help you understand whether they are suitable investors ahead of time. It will also give you a chance to adjust your pitch according to who they are individually.
Easy ways to conduct research on your potential investors include:
- Checking out their company website
- Looking for personal websites
- Searching for news articles about them
- Reading their social media posts
- Learning about their history (where they grew up, education history, etc.)
By taking the time to learn more about your potential investors, you will be in a much better position to make a compelling case for why they should invest in your company.
One of the first things any potential investor is going to want to see is your business plan. This document should outline your company’s goals, strategies, and how you plan on achieving them.
Your business plan should be clear, concise, and easy to understand. It should also be realistic and achievable. This is not the time to be overly optimistic about your company’s potential.
Investors want to see that you have thought through your business plan and that it makes sense. They also want to see that you are realistic about what your company can achieve in the short and long term.
If you need help putting together a clear business plan, we recommend checking out some business plan samples to get started.
The process of convincing an angel investor to invest in your company can take months, or even years. This is why it is important to start your outreach campaign as early as possible.
One way to do this is by attending startup events and networking with potential investors. These events are often full of people looking to invest in startups, so they can be a great place to make connections.
Another way to reach out to potential investors is by sending them a personal email or message. This can be more difficult, as you will need to do your research on each individual investor and craft a unique message for each one.
Platforms like AngelList are also a great way to connect with potential investors. This website allows startups to create profile pages and connect with angel investors from all over the world.
One of the first questions any potential investor is going to ask is: “How much money are you looking to raise?”
This is not a question you should answer off the top of your head. You should have a clear idea of how much money you need and what you plan on using it for.
Some common expenses that startups need funding for include:
- Research and development
- Hiring new employees
- Marketing and advertising campaigns
- Product development
- Office space rental or purchase
- Equipment purchases
Remember, you will also need to show potential investors how you plan on making money back. This is where having a strong business plan comes in handy.
If you are looking to raise money from angel investors, it is important to do your homework, have a well-thought-out business plan, start your outreach campaign early, and know how much money you need and what you will use it for. By following these tips, you will be in a much better position to convince potential investors to invest in your company.