A business owner having less capital at hand would want to know how to get funding from Angel investors. One way of doing this is to find and connect with investors. You will need to conduct thorough research before embarking on it.
Carrying out some findings is the first step to take. This includes having a solid understanding of the normal process you need to take.
Before seeking to know how to get funding from an Angel investor, note that you are not taking a loan. Rather you are seeking to know how to enter into an agreement with a business sponsor.
Angel investors are high-net-worth individuals who are seeking potential start-up firms or businesses to sponsor. Below are ways to get funding from Angel investor
1. Do a thorough research
Before getting an Angel investor to fund your business, a clear and complete understanding of your choice of investment is very important. You need to know what works well and what does not work your target market, and consumers.
What nature of product or assets you are investing in? Who are your competitors and your target audience? What do you intend to achieve and the duration of your investment objectives? If you understand all these then you will be able to achieve success with your request.
2. Find and connect with investors
To get funding from an Angel investor you need to associate with them. We have different types of investors like Venture capitalists, Accredited investors, and Institutional and Retail investors.
At first, you may not be able to point out a particular investor who is willing to fund an investment. Therefore, you need to take some process of identifying the Angel investors among them.
All you need to do is build a strong network by attending meetings, seminars, and other social gatherings organized by investors. The social connection will expose you to identifying the real Angel investors among them. You will also know the high net worth among them who is willing to fund an investment.
3. Prepare a clear business plan
Before you consult or approach an Angel investor for funding, prepare a compelling plan. One that highlights what your business is all about. Describe your business module, goals, product, or services.
Highpoint your marketing strategies and how you intend to penetrate your brand among competitors. Also, include in your plan the benefits and value of your business, and craft your plan to be more concise and persuasive.
You can conduct market research before preparing your plan so that you can have an accurate analysis of your plan. Prepare your plan in such a way that the Angel investor will be convinced and willing to fund.
4. Showcase your product
One important thing the Angel investor would want to know is if your product or services meet market demand. No investor would want to waste time or money funding a start-up whose product is less demanding to the public.
For this reason, you have to do complete research on your product and understand its effect in the market. After that showcase your product or service to the Investor demonstrating that it meets consumers’ needs and has a demand gap.
5. Leverage your team’s expertise
Angel investors also look out for businesses that have good managerial teams. They believe working with experts can help achieve success.
Therefore, ensure you have a good managerial structure you can leverage while emphasizing your skills and experience. Having a team of experts can instill confidence and courage in the Angel investor.
6. Make your terms and agreement attractive
Angel investors’ motive for funding start-ups is to increase revenue and financial net worth. Notwithstanding the risk they understand might be inevitable, they still commit their fund.
Therefore, while understanding this risk you need to offer attractive conditions and agreement which includes equity ownership and potential returns. Structure your terms and dealings to be appealing and fair enough for the investor to accept easily.
7. Search for specialized Angel investor
Before seeking an Angel investor to fund your business, take time to study which investor qualifies for the task. Do not just approach any investor because some might not have enough time for commitment. While some might not be in your line of industry.
Therefore, Take time and target an Angel investor who is more experienced and interested in your line of business. An Angel investor who is more specialized in your industry will certainly dedicate funds, time, and expertise to the business.
8. Show honesty and friendliness
Every business has its challenges and setbacks, like things you might try to control but are within your limit. It might be financial, material, or economic but your interest is to overcome this.
Since you are involving the Angel investor in your business you must be honest and open up. Ask questions, seek opinions, and show concern on any issue that borders the business. This will also help the investor to feel committed and part of your business.
What criteria do Angel investors look out for?
What are the things Angel investors look out for when attempting to fund a start-up? If you are an Angel investor you have some policies or strategies for committing your hard-earned fund. You are just trying to be careful and at the same time avoid risking your money.
1. Potential business idea: Angel investor considers businesses with high growth potentials, one with pioneering techniques and capable of penetrating competitors.
2. Well-built managerial team: Angel investors are encouraged more when they observe a firm has more professional workers who can also exercise their expertise.
3. Product opportunity: They look out to fund start-ups whose product or service meets growing market demand.
4. History and substantiation: They look out for start-ups whose foundation demonstrates progress and future projection of success.
5. Competitive advantage: The start-up should have the proposition of being able to compete with other industries.
6. Risks and rewards: They evaluate what risks are involved and how possible it is to overcome and attain rewards in return.
Understanding the process of how to get funding from angel investors is very important. Especially for an individual who has a business plan but with limited funds. Angel investors are willing to fund businesses but securing funds from them can be competitive.
If you acknowledge these processes and keep persevering you will be able to acquire funds from the investor easily. Although, in some way, different Angel investors have different choices and interests you still have to prepare accordingly.