A new business looking for startup financing is likely to have the best chance approaching angel investors rather than venture capital. Angel investors help provide seed money for businesses not yet in the “prime time” of their operations, meaning they are still in product development and have not yet brought their product or service to market.
However, obtaining start up financing from angel investors is still not an easy task. A young business must convince the investor that their new business idea is market-worthy and potentially profitable.
Thankfully, a young business with these three business cornerstones in their bag will find that gaining the attention of angel investors will be much easier.
A Valid Idea
Not every new business idea is worthy of startup funding. Some big new ideas start out quick out of the gate and are good concepts. However, after research and analysis, the idea may fizzle. By contrast, even a mediocre initial idea can become a home run with the right finessing of the concept and market strategy.
To gain attention of angel investors, your business idea must be past any concept stage. You must present the idea with plenty of solid background about how it matches a market need and show research that customers are interested in buying.
A Solid Presentation
A great business idea cannot get very far without a convincing pitch and presentation to a potential angel. How you sell your story to an angel investor is what will set you apart from the other choices.
A solid presentation will include confidence in the presenter, details behind the scenes of management, and a compelling vision packaged into about 15 to 20 minutes. Also be sure to not only practice your pitch, but have answers ready for any potential question that an investor may ask.
The final lynch pin in securing startup funding from angel investors is having rational and reasonable data to back up financial results and projections.
Remember that angel investors are going to choose to invest in businesses with valid data backed up by research. Any “concepts” and “what ifs” do not work in instilling the confidence to send you investing dollars. Be sure that even if you have no previous transaction or income history, you perform the necessary market research and business modeling to prepare a rational projection of sales, income, and expenses.