Just hearing the name "angel investor" brings to mind some almighty force saving your company from damnation with their generosity. In reality, it's not quite like that but for any startup company, an angel investor can be a ticket to the big show. But why do investors help others? What really goes on inside their heads? Well, if you're a budding entrepreneur, here are a few things you need to know about it all.
Are you an entrepreneur with big dreams and a small wallet? If so, you probably want some investors. If your idea is good enough, surely you'll find someone to foot the bill but how much can you expect? Well, the average angel investment is anywhere between $25,000 and $100,000 for a startup. Of course, this number can certainly go higher for the right person.
It might seem like investors just have an unlimited supply of money but they don't. Hence, they're not just going to spend their money on any old idea. When looking to invest they are looking for a few key factors. For one, they want the founders to show a passion and commitment for quality and integrity. Then, they want to see if the company has any potential to grow in this current market. Along with that, the company must have a well thought out business model and a clear direction with their technology or intellectual property.
Investors might seem intimidating but they are simple creatures really. As an entrepreneur, you only need a few key things in order to get attention. It all starts with a clear and articulate business pitch. Once you rope the investors in with that, hit them with the executive summary and a working model of your proposed product and/or service. You've seen the show Shark Tank right? No one comes unprepared. You can't just show up with an idea. That's far too big of a risk. Show them you have something that's working and ready to go. Even better if you already have a few early, loyal customers.
Sometimes you get lucky with angel investors. They might love your idea right off the bat and throw down that cash. But that's unlikely. A good rule of thumb to live by is that it will take some time to raise proper angel financing. Not only do you have to seek out the right investor for your product, but you have to go to various meetings, take part in negotiations and more. Raising enough capital is a very time-consuming process but be patient.
If there is anything investors love, it's a good question. How much capital are you raising, What are the unit economics? What are the likely gross margins? What will be your monthly burn rate? These are just a few questions an angel investor will throw your way. If you think they're being nosey, just relax for a second. These questions are completely normal. In fact, if your investor isn't asking these questions, then they're probably not the right person for the job. Think of it as a first date. If your date is asking you tons of questions and genuinely interested in your life, then that's someone you want to keep around. So all in all, an investor is like a partner you don't sleep with.
Sadly, finding a good investor isn't as easy as going to InvestorMart where you can find all the hottest deals on the best angel investor. But there are still a few ways to seek them out. For example, you can submit your product to crowdfunding sites like Indiegogo or Kickstarter to raise some money. For something a little more advanced, seek out venture capitalist firms and investment bankers. AngelList is also another great online resource to reach out to your angel investor. Of course, you can always ask your lawyer uncle for a few bucks but who knows how that will go. All in all, finding an investor is nothing you should worry about. If you want a great resource to read up on some inspirational and informative investing stories, head on over to Investory-video.com. You just might learn a thing or two.