Are you the founder of a rapidly-growing startup? Have you reached the part in your growth story where bootstrapping just won’t cut it anymore?
Are you the founder of a rapidly-growing startup? Have you reached the part in your growth story where bootstrapping just won’t cut it anymore? Are you ready to build a robust sales team to go out and sell the heck out of your new product?
If you answered “Yes” to any two of these three questions then you might be ready to receive outside capital. You might want to start looking for your first Angel investor.
Remember: angel investors get approached every day about startups looking for funding. they turn down about 90 percent of the companies that pitch them. What can you do to increase your chances of getting funded?
How does an angel investor work?
An angel investor or angel (also known as a business angel, informal investor, angel funder, private investor, or seed investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.
Tip 1: Pitch Angles in Your Space
As new entrepreneurs, we often make the mistake of thinking anyone with funds to invest is a good fit. The truth is you want to ask Angels who have some experience running, or have at least invested in a company like yours before. Not only will you get the money needed to grow your business but you will get a partner with experience who understands the unique challenges you face daily.
Tip 2: Have a solid Growth plan you
Most entrepreneur think their idea is awesome and unique. Many spend too much time focusing on their own concept and not How they are going to attract thousands of new customers. Many never consider the fact that at some point any investor will want a return on their investment, and will need to see how you plan to grow enough to make money.
This is typically the case with tech startups. They tend to spend too much time thinking of user growth and new product features, and will typically have no idea how to make money. I am not saying you have to be making money now, but you sure need a solid plan to go out and make some, at some point. Hearing that you have a plan to make money will be music to any potential investors ears.
Tip 3: Network
As an entrepreneur, you can never shake enough hands. Take every opportunity to attend business events, conferences or mixers. Don't spend all your time networking online either. Get out there and shake hands with business leaders in the community. Tell them about your company and get the conversation started.
Tip 4 : The Angel in disguise
I am hoping that at this point you have a handful of paying customers. You have managed to attract some brands to partner with you right? Well, if you have, then let me talk to you about the "Angel in disguise". This is typically a successful business owner whose company initially signed up to be a customer of your firm. They are very familiar with your products and services and best of all, have seen you grow. This person is perfect to pitch. They already see your value and you need not prove yourself to them. Just put some feelers out and see what happens.
Tip 5 : Know your numbers
If you’ve ever watched The Lion's Den and seen founders who seem confused when asked what their profit margin or sales figures are, you have seen how not knowing your numbers can spoil a startup’s chance of getting funded.
Even if you’re not the CFO in your firm, as a business owner — especially one looking to be funded — it is very important that you know specifics:
Sales (in dollars) over past year
Prior to approaching Angels, spend time reviewing these figures so that when you’re asked about them, you are ready with the right answers.