Tuesday, April 18, 2017

Divine Intervention: Approaching Angel Investors

One of the biggest problems facing entrepreneurs is the small budgets they have to work with, and sourcing the funds they need to accelerate, launch, or grow their operation. If you’ve caught on to all the buzz surrounding angel investors, and you think they could be your ticket to riches, you need to approach them in the right way. Here are some great tactics for getting angel investors in your corner.

Have a Record of Success 

If you’re having to fight tooth and nail just to keep your business from going bankrupt, this isn’t the right time to start fishing for investors. Angel investors, and any kind of creditors for that matter, want to know what they’ll gain from the deal, not how they can bail you out of a rough patch. If your business hasn’t even launched yet, there’s a pretty slim chance that you’ll be able to coax them out of a single penny. You don’t have a history of sales, so there’s no hard evidence you’ll be able to succeed. However, if you’ve been running your business for some time, and enjoying a healthy profit margin, you’re in a pretty strong position to ask for an investment. It may sound a little backwards to ask for money when you don’t need it, but these funds can be used to make a successful operation even more lucrative. 

Stick to your Industry 

One of the most common mistakes entrepreneurs make when looking for investors is approaching ones who have absolutely nothing to do with their industry. You wouldn’t ask your kid’s pediatrician about a pain in your tooth, so why would you talk about ultra irrigation flow measurement to an investor who has a history in software development? Your typical angel investor will have extensive experience in a certain business niche, and may have even been some kind of entrepreneur themselves in the past. By finding one who not only understands what you’re trying to develop, but also has a wide network of contacts in the industry, you’ll give yourself a much better chance for success, both with this loan and in the long term. 

Go in With a Plan 

It’s absolutely imperative that you have more than just a vague idea when you start reaching out to angel investors. Sure, you may think that your product is so great the demand will allow it to take the world by storm. However, an angel investor who has decades of experience seeing similar products hit the market may have different ideas. If you’re still in the early stages of your business, make sure you can bring a lot of research and development to the table, including insights about your target market, and enough hard data to come up with accurate (and positive!) cash flow projections. It’s also important to show a keen understanding of the competition your business will be up against. No one’s going to invest in your idea if they know it’s too similar to another one that already has a hold on the market.

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