Tips for Those Seeking Angel Funding
For much of the last 2 weeks i have been looking at business plans – lots of them. Each and every day i am approach by someone with a new idea. They are all wanting funding, all are claiming to have something special, and all truly believe they will be massive in a few short years.
The question for me is how do you find the real nuggets of gold amongst all the noise?
A couple of days ago i attended the Angel Connect conference in Hobart, Tasmania as one of the speakers. The conference looked at everything from what makes a good idea through to raising money, closing the deal and working with Angels and VCs.
It got me thinking about how i i would approach an Angel investor if i needed funding. So here are my top 8 tips:
- Dont send me a 50 page document on your idea – i wont read it. It is all about being concise in describing the idea. Send me 2 – 3 pages. That will do.
- Make what you say clear and easy to undertand. If you cant make it easy to understand for a relatively sophisticated investor, then how will your customers understand what it is that you sell. Keep it simple.
- Make the financials realistic. Your financial model has to be realistic. Too often i see “hockey sticks” for revenue growth charts and i just dont believe them. If it is that good, you would find funding from friends and family.
- Have a realistic valuation in mind. Times are tough and funding is scarce. Valuing ideas on paper at high values with little evidence to back it up doesnt warrant valuations for $10m+ – keep it real.
- Be prepared to sacrifice to make it happen. Investors want to see that you have skin in the game. They want to know that you are 100% commited to the project and if it fails, it will hurt.
- Dont make me sign a Non Disclosure Agreement. I am not a fan of them and as you are approaching the angel and need funding, make the process as smooth a possile.
- Be able to demonstrate more than you can write a good document. Too often the idea is just that, an idea with little behind it. The more evidence of likely success, the better.
- Dont enter existing markets and think you can knock over the encumbents. Too often i see business plans for yet another portal site entering an already over crowded market with the claim that they will knock the encumbent off … i just dont believe it!
- Be open to operational and strategic help. Angels like to play with businesses meaning they want a say and want to help you out. Be open to this.
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Hi Simon,
Does it happen that angels invest in people rather than in projects?