Getting an investment from an Angel investor starts with an understanding of what type of investment will get their attention.
Terry Peltz, The Performance Advisor, wrote a great article “Angels with Check Books” more at http://www.articlesbase.com/entrepreneurship-articles/angels-with-checkbooks-5138582.html . This blog will supplement that information with the criteria Angels look for in an investment.
If you are seeking equity funding from an Angel Investor you must understand the key criteria that they will be using to judge your investment opportunity. Investing in early stage companies has high risk and they expect to invest in opportunities that have the potential for very high returns. You should consider the following if you want to fly with the Angels:
1. They are interested in investing in a business that has an exit strategy leading to the potential for a liquidity event (Going pulbic or sale of the company) in a 3 to 5 year time frame.
2. The business must have a believable sustainable competitive advantage that addresses real world needs. Sustainability will help protect their investment and in most cases the preference is some sort of patent protection.
3. The financial projections for the business need to substantiate the possibility of the investor being able to get 10X to 30X his investment after the liquidity event,
4. The angle investor may be interested in bringing other capabilities beyond the investment to assist the company to implement the plan.
5. Looking for a management team that has the experience to implement the plan as presented. If you don’t have a management team-get one.
If you do not score well on these criteria there is a very low probability that you will be successful raising financing from established Angle Investors. You may want to consider alternative forms of financing to get the resources that your idea requires.
