Angel investors, also known as private investors, are high-net-worth professionals providing financial support for startup companies for ownership equity in your company. They want to replicate the successful investments of giant corporations like Facebook, Instagram, and Uber.
Like other significant investments, angel investors must be willing to take the high chances of failure with investing in startups. These professionals must carefully review several issues before undertaking a startup investment.
This article will discuss some things angel investors must know before investing in your startup.
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CEO/Management Team
Before making the startup investment, angel investors must determine if your team has the appropriate skills, experience, and attitude to grow the company in the next 12 months. They will also ask about your company's founders, team members, and employees.
Moreover, angel investors must observe if the CEO is reliable and approachable. These factors can help determine if the agents will create a startup investment with your company.
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Level of Determination
Most reputable angel investors know that startup investments are risky yet fulfilling. And they want to find business owners genuinely dedicated to growing their companies. They also want to determine if you're ready to face the inevitable highs and lows of the company.
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Business's Understanding of Key Metrics and Financials
Angel investors will only create a startup investment in your company if you can articulate your business's financials and key metrics. They'll look at your business's key performance indicators, such as monthly burn rate, gross margin, projected revenue growth, customer lifetime value, and acquisition cost.
They'll also ask how long your company will get to profitability and how much additional capital you'll need to raise.
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Positive Early Traction
Angel investors would put up a startup investment if your company gains positive traction in your business's early days. Strategic partnerships, customer testimonials, and early buzz or press headlines prove your business's early success.
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Company Product Quality
It's also best to articulate your company product or service's quality and why users should invest in your branding. You should also present its unique features, significant milestones, and how you'll improve your existing product or service.
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Market Opportunity Size
Angel investors will put up a startup investment if your company can directly address why and how you have the potential to scale your business.
Never present small ideas; position your company as a "platform" business allowing the creation of different products or apps. They'd want to know the addressable market and how much you want to capture over time.
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Referrals
It can be a significant advantage if the investor knows and likes a business owner. If not, the best way to convince an angel investor to create an investment is to introduce them to a reliable source.
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Quality of Initial Investor Pitch Deck
The first thing angel investors will look for in your potential startup investment is the quality of your investor pitch deck before the consultation. You can prepare and present an excellent pitch desk by reviewing other previous presentations and integrating their best practices.
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Potential Risks
Angel investors implement a startup investment if your business plan has effective strategies to mitigate all potential risks.
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Future Purpose for Investment Capital
Your capital investment plan will determine how you'll use the funds from your investors and the estimated burn rate. It will make them confident that you have a clear purpose for their money.
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Financing Round Terms and Valuations
Lastly, angel investors may ask questions about your financing round. They want to know how much money you've raised and how much they've already committed. They'll also ask about prior or current investors participating in the round.
The Takeaway
Angel investors will only put up a startup investment in your business if you can articulate accurate information about your company and present realistic, long-term goals.
If you're looking for angel investors to set up a startup investment for your business, we can help. Drop Studio helps to raise over £50 Million for our clients through crowdfunding, angel investors, and venture capital. We also connect companies with business loan organisations for additional finances through Drop Business.
Visit our website to book a free equity fundraising consultation or connect with organisations for business loans.