Every entrepreneur with a great business idea wants the chance to get before venture capital investors or angel funding and be awarded a large sum of business capital. Alas, only a small number of all potential small businesses actually get the nod from venture capital or angel funding.
What does it take for a business to make the narrow cut and find themselves on the short list for angel funding? Here are a few important status milestones you
A Dream Team
Even an average business idea can be wildly successful with the right leadership team behind it. Angel funding groups and venture capital funding will scrutinize the management team on their prospects. They will look at the quality of the team in terms of years of experience, industry track record, and particularly other experience with successful startup businesses.
The Right Market
A fundable startup company will have the details of the market to prove to angel funding groups or venture capital funding that a market exists, and that it is not too big or too small. The market projections should be found within both the business plan and the business model so investors can see details of market research and how the market will be reached.
Industry and Geography
Before you submit any type of proposal for angel funding or venture capital funding, check the details of the venture capital or angel funding group to be sure of what types of companies they are interested in. These specs can normally be found on widespread venture capital or angel funding data bases, on their websites, and on their printed materials.
Start up funding groups tend to narrow their scope by industry and/or geography. If your start up business is not in either category for the funding group, don’t bother wasting their time or yours.
Believable Financial Projections
Angel funding groups and venture capital funding firms have seen enough loosely based financial projections to spot the unreasonable and even laughable ones right away. Your income projections should be based on past experience, or at least on a reasonably similar business model within the industry. It should clearly state reasonable gross margins of at least 50% and rational profit projections. Don’t display outrageous net profits of 20% or more – it will get your proposal tossed out immediately.