By. James Conrad
By nature, visionary people have a strong independent streak. These are the exact sort of people who would be absolutely MISERABLE in nine-to-five suit-and-tie jobs, especially if the business plan they learned and developed at college makes it seem as though it’s possible to work toward living the dream of being one’s own boss. However, as much as it pains the idealist in me to say this, launching a business requires lots and lots of money, and the average college graduate’s bank balance simply won’t cover such an expense. Luckily, angel investors, who privately finance new businesses, are becoming more and more common. In fact, a study conducted by the Center for Venture Research at the University of New Hampshire, the money put forth by angel investors has generally hovered between $15 billion and $25 billion since 2005. According to entrepreneurial expert Ty Freyvogel, founder of makingsenseofyourbusiness.com, “[Angel investors] have been entrepreneurs themselves and delight in helping start-up or even established companies grow toward success. There are countless angels out there just waiting for a worthy project to fund.”
However, attaining funds to launch a startup from an angel investor is not quite as easy as it sounds or looks. They won’t give money to just any schmoe from off the street. First, you have to get the investor interested in your idea.
To successfully pitch to an angel investor, your idea should be well-considered, fully developed, and presented to the investor in an engaging way. Since your presentation will make or break you, it would certainly be a good idea to practice your presentation, and make revisions as necessary.
When presenting your pitch, try to be intelligent, lucid and informative, but don’t be dull about it. Try to cause your natural excitement about your idea become contagious enough to spread to the investor. Also, because angel investors invest more in people than ideas, they usually tend to gravitate toward friendly and positive people, so impeccable manners and an enthusiastic disposition will certainly help you get far with them.
It is also important to remember that your product or idea is not as important as the work behind it. It is worth considering not only the selling points of your product, but also strengths of your work team, the marketing information you have collected, and your competition. Because angel investors have entrepreneurial experience, they will naturally recognize whether or not you have done your homework. You must also keep in mind that it is the best idea to approach the kind of investors that are a good fit for your business. Some opt for startups, whereas others prefer to take risks on more established firms that are looking to expand. Either way, they most certainly will have a limit as to how much money they are willing and able to put up front as an investment. But with that in mind, it would certainly be a good idea to put forth some of your own money, as it will indicate that you have just much of a vested interest in your endeavor as you hope to draw out of them. Truth be told, if you can prove that you don’t desperately need an investment, you will be more likely to attain one. Showing the outside world that you are self-sufficient will be encouraging for angel-investors, as it will also show them that you make excellent financial decisions. Two key indicators thereof are a solid customer base and an excellent history when it comes to meeting expenses. Having both under your belt will make it easy to plead your case to an angel investor when you feel a burning need to expand your business.
It is also very necessary to seek out investors who are as adventurous as they are wealthy. In addition to the fact that these people often will have profound experiences launching businesses, they will know what risks to take, and when to take them. If you become aware that they have a predilection for high-risk leisure activities like say, skydiving or bungee jumping, this could be an indication that they could throw a little baksheesh into your pursuit without thinking twice about it.
Logistically, it is the best idea to seek out investors geographically close to you. As a rule of thumb, fifty miles should be a good maximum distance, as it will make it easier for an investor to swing by at the drop of a hat and check in and see how the operations are running.
By no means be intimidated by a prospective angel investor. At one point, they had only just started in the business world. With that in mind, after they notice your well thought out business plan, your engaging pitch and your enthusiastic presentation, they just might tell you that you remind them of themselves when they were your age.