Via Forbes : Almost every startup will need investment money at some stage, and more often than not, will have to ask for it. Angels can be a boon to your company, but what traits are they looking for in an entrepreneur that will give them confidence to invest generously?
As an investor, I’ve been approached by many startups, and I’ve learned that not all startups are cut from the same cloth. There are a few very clear signs that I personally look for in an entrepreneur before I am willing to make any long-term investment. Before you make your first pitch, follow my advice for a smooth and fruitful connection with any angel.
- You have a great team already.
Angels generally take more chances on smaller experimental companies, which means they take on more risk in their investing. This is why the exceptional, experienced team who success is already proven has a much greater chance of piquing the interest of angels than an inexperienced team, no matter how great the product. Can your team convince other investors to join? Can they see the company through to success? Your effectiveness is directly tied to the team you build around your self, so make it a dynamic, seasoned one.
- You’ve done your research on the investor.
If you haven’t done your own work and focused to find out your angel’s history, you’re setting yourself up for failure. Are you pitching to angels who invest in your space? Do you know why they invest, or whom they have invested in before? What are they interested in? What is important to them? Do your due diligence so that you don’t waste their time or your own.
- You are able to get an introduction from someone they trust.
Angels aren’t going to act like VCs when you ask for money. Angels invest in people more than they invest in business ideas, so they need to know you, or be introduced by someone that they trust. You can imagine how many startups are trying to get in on the ground floor, so don’t cold-call or just straight up ask for money. Find out whom they trust — who are their key advisors? That’s the person you want to meet.
- You recognize your shortcomings.
Every entrepreneur has a weak spot (or spots) that will make him or her a liability. Of course, any angel with experience knows this, and will be expecting you to have the self-awareness and know-how to move forward. How are you going to overcome those shortcomings? Have you built a team around you that can compensate for the areas in which you aren’t well versed? Spend some time learning your weaknesses so that you can show the fortitude of admitting them first.
- You know what your customers truly want.
The initial investment in a company is a risky venture, so everything you do to prove that your business is already successful is money in your pocket. Have you done enough research to prove that your business model will be enough to take your product through to scale? Have you compiled reams of customer feedback, done A/B testing, and know exactly what will work? You need to prove to an angel that your company is solving a problem in an innovative way that is bound to be successful.
- You know who your competitors are.
The space in which you are competing is often much broader than you think. Competition isn’t just another business with the same product that perhaps will take customers away from you. It can be a developing product that you should be licensing to sell, a product that makes yours redundant, or a competitor in another country. Don’t make the mistake of thinking that you’re unique — angels want to see that you possess the lightening quick innovation and preparedness you need to compete in today’s market.
- You know your market.
Today’s market is saturated with products and services, and there is almost always another choice of business to patronize. So it is especially important that you can prove to angels that you’ve done extensive market research: how will you address that market? Do you know your geographical boundaries (if you have any), customer’s latest demographic data, trends in your markets (both demographic and product-related) and have a well-thought out marketing plan? Be smart about your market plan and you will be rewarded handsomely.
Above all, make sure that you aren’t going in blind to a meeting with an angel who could potentially make or break your business. Be smart about your research, surround yourself with great people, and create a lasting, trustworthy relationship with the investors who want to see your startup succeed as much as you do.
FORBES | 7 Ways An Angel Can Tell If An Entrepreneur Will Be Truly Effective