Anyone who’s ever started a business knows that raising money is one of the biggest challenges you’ll face. And if you’re not careful, it can be a soul-sucking, time-consuming endeavor. I should know. I’ve started four companies, and spent countless hours trying to raise money from angel investors, VCs, and other traditional sources of startup capital.
Fortunately, I’ve also been on the other side of the table. As an angel investor, I’ve invested in over thirty companies. And I’ve seen firsthand what works (and what doesn’t) when it comes to pitching investors. In this post, I’ll share some of the best practices I’ve learned for raising money from angel investors.
First, a quick note on terminology. In the startup world, the terms “angel investor” and “venture capitalist” (VC) are often used interchangeably. For the purposes of this post, I’ll use the term “angel investor,” which generally refers to wealthy individuals who invest their own money in startups (as opposed to VC firms, which pool money from limited partners).
One of the most common questions I get from entrepreneurs is “How do I find angel investors?”
The answer, unfortunately, is that there is no surefire way to find angel investors. But there are a few avenues you can explore:
1. Personal connections: Perhaps the most common way entrepreneurs find angels is through their personal and professional networks. If you know anyone who’s already an angel investor, or who knows angel investors, that’s a good place to start.
2. Online investor networks: There are a number of online networks that connect entrepreneurs with angels, such as AngelList, SeedInvest, and EquityNet.
3. Angel investment firms: Some angel investors are members of formal angel investment firms, such as Band of Angels, Golden Seeds, and Tech Coast Angels.
4. Accelerators: Some accelerators, such as Y Combinator and Techstars, have programs that include angel investment.
5. Venture capitalists: While VCs are not typically considered angels, some VC firms will make seed investments in startups.
6. Crowdfunding: Platforms such as Kickstarter and Indiegogo can be a good way to raise money from a large number of small investors.
Keep in mind that raising money from angel investors is a numbers game. The more investors you can reach out to, the better your chances of finding someone who’s interested in your company.
When you’re ready to start pitching investors, there are a few key things to keep in mind:
1. Keep it concise: When you’re pitching investors, you’ll usually have only a few minutes to make your case. So it’s important to be clear, concise, and focused.
2. Focus on the problem: The first thing you need to do is articulate the problem your business is solving. For example, if you’re pitching a new app, don’t start by talking about how great the app is. Start by talking about the problem it solves.
3. Explain the market: Once you’ve articulated the problem, you need to explain the market. Who are your potential customers? How big is the market?
4. Describe your solution: After you’ve talked about the problem and the market, it’s time to describe your solution. What is your product or service, and how does it solve the problem?
5. Tell your story: A good story can be a powerful tool for conveying your company’s vision. So don’t be afraid to share your personal story, and the story of your company.
6. Focus on the future: When you’re pitching investors, you need to focus on the future. They’re not interested in hearing about your past successes or failures. They want to know what you’re going to do next.
7. Ask for what you want: When you’re pitching investors, it’s important to be clear about what you’re looking for. Do you want a certain amount of money? Are you looking for a certain type of investment?
8. Be prepared to answer tough questions: When you’re pitching investors, they’re going to want to know about your business. They’re going to ask tough questions, and you need to be prepared to answer them.
9. Don’t give up: Raising money from angel investors is a tough process. You’re going to get
You've likely heard the term "elevator pitch" before, but what exactly is it? An elevator pitch is a short, concise explanation of your business that you can give to someone in the time it would take to ride an elevator. It's important to have a clear and concise elevator pitch because it can be used in a variety of situations, such as when you're networking or meeting someone for the first time.
Your elevator pitch should explain what your business does and why it is unique. When crafting your pitch, think about what sets your business apart from others in your industry. For example, if you're a web designer, you might say something like "I help businesses create beautiful and user-friendly websites that help them stand out from their competitors."
Don't try to cram too much information into your elevator pitch—you should be able to deliver it in under a minute. And make sure you practice it before you need to use it so that you can deliver it confidently and without sounding like you're reciting a script.
When you’re looking for investment, it’s important to do your research and target those investors who may be a good fit for your business. This is especially true when it comes to angel investors, who are often active in a specific industry.
To find the right angel investors for your business, it’s important to get to know the industry landscape. Who are the big players? What companies have they invested in? This will give you a good idea of who to target.
It’s also important to look at the type of investments that each potential investor has made in the past. What companies have they been successful with? What industries do they seem to prefer? This will help you to target those investors who may be a good fit for your business.
Once you’ve done your research, it’s time to start targeting those investors who you think may be a good fit. Send them a personalised email or give them a call to introduce yourself and your business. If they’re interested, they’ll be sure to get back to you.
If you're looking to create a strong pitch deck, there are a few things you'll want to keep in mind. First, you'll want to make sure that your deck is professional and well-designed. This means using high-quality images and clear, concise text. Second, you'll want to focus on highlighting your business's strengths and potential for growth. This could include discussing your unique selling points, your target market, and your plans for scaling your business. Finally, be sure to practice your presentation before delivering it to potential investors or partners. By following these tips, you can put together a strong pitch deck that will help you get the funding and support you need to grow your business.
Starting a business is risky enough, but when you're looking for funding from investors, you need to be prepared to answer some tough questions about the potential risks and challenges your business might face. By being honest and upfront about the risks involved, you'll instill confidence in potential investors and show that you're serious about making your business a success.
Some of the tough questions you should be prepared to answer include:
What are the biggest challenges your business will face?
How do you plan to overcome these challenges?
What are the potential risks involved in your business?
How do you plan to mitigate these risks?
What are the biggest threats to your business?
What are your contingency plans if things go wrong?
Answering these questions honestly and with confidence will show investors that you're well prepared and that you have a good understanding of the risks and challenges involved in your business. It will also give them a better idea of whether or not they want to invest in your company. So, be prepared to answer tough questions when seeking investment for your business.
If you're looking to raise money from investors, you need to have a clear plan for how you're going to use their money. It's not enough to just have a great idea - you need to be able to articulate how you're going to turn that idea into a reality, and how the investor's money will help you do that.
Think about what you need the money for - is it for hiring staff, buying inventory, marketing, or something else? No matter what it is, you need to be able to show how it will help you achieve your business goals. Investors want to see that their money is being put to good use, and that you have a clear idea of how you're going to make your business a success.
So before you start approaching investors, take the time to sit down and map out a plan for how you're going to use their money. It'll give you a better chance of securing the funding you need, and it'll show investors that you're serious about making your business a success.