Thinking Like an Angel

THINKING LIKE AN ANGEL

The Angel Mindset 

If you want to encourage investors to put money into your business, understanding the mindset of an angel investor can be invaluable. Investors can help take a business forward by leaps an bounds and knowing what they are looking for will help you get your venture the capital it needs

Common mistakes and how they can be

Rectified or Avoided

1 | The most important things an angel investor will want to know are:  

  • Details about product or service
  • Details about prospective customer
  • Benefits of the product to the customer
  • When your product is expected to be available for sale in the market
  • Pricing and methods of payment
  • Likelihood of repeat customers for your product or service
  • Profit expected with a timeframe
  • Details about competition

  

2 |With regard to the capital to be invested, an angel investor will need to know

  • Expected development costs
  • Expected revenue over the next few years
  • Expected expenditure over the next few years
  • Projected sales over the next few years
  • Whether you as the entrepreneur have invested, or plan to invest capital in the venture 

 

3 | An investor will also want

  • Proof of customer satisfaction with the product
  • Evidence that you have the investor’s interest at heart, in addition to your own
  • Proof of your skills, leadership abilities and competence
  • A picture of the positioning of your business in the market in relation to other companies in the same field
  • An idea of how you plan to benefit from a market that has been developed by competitors

 

4 | Investors are likely to be deterred from putting money into your business if

  • You don’t have the necessary qualifications or experience
  • High levels of complex, advanced technologies are involved routinely in your venture
  • You paint too rosy a picture of your venture’s future
  • You are not objective and practical while assessing relevant facts
  • You have not invested any money yourself

 

Generally speaking, angel investors prefer to be involved to at least some extent in the businesses in which they have invested. So the trend is for angel investors to get into start up ventures or small businesses, where their skills and experience in business will be useful in taking such an enterprise ahead

Look for those who are successful, experienced, and who are willing to wait till your venture is ready to offer returns. You also need ensure that your investors have easy access to the capital they are offering. You shouldn’t have to pester your investor for money – it is both time-consuming and counter-productive. Remember not to agree to accept a smaller amount of money than what is actually required, and ensure that communication channels between you and the investor are always clear

5| Consider the following facts of angel investing

  • Regular angel investors usually consider only three of the approximately hundred business investment opportunities they are offered in a year
  • 85% of business plans are badly presented
  • 50% of entrepreneurs do not have the ability to run a business well

 

Remember not to neglect areas such as banking, vendors, the community your enterprise belongs to, and corporate social responsibility. All these will have an effect on your potential investor’s decision.