How to Get an Angel Investment
To really succeed at building relationships with angel groups and getting investments from them, you have to understand how they work. If you match an angel group’s investment criteria, the next step is to go through their process. But for a lot of entrepreneurs, that process is opaque. While some angel groups might provide you with a detailed written process, a lot won’t. But, in either case, there are three things you have to do to get an angel investment.
- Secure a Champion: You will need at least one or two members within the angel group that will be your champions and promote investment in your company to the larger group. Your champions believe so strongly in you and your business that they are willing to put their social capital and reputation on the line to convince others that your company is a worthwhile investment opportunity. In many cases, your champions will also be individuals with relevant industry expertise.
- Prove Your Business Model: Every angel group will take time to review several key elements of your business to understand whether it’s the right fit. In particular, they will focus on the strength of your value proposition — are you creating a compelling enough benefit to change behavior so customer’s adopt your solution and stick with it? From there they’ll evaluate how much traction you have, whether your team has what it takes to take the business to the next stage, and whether you can raise your next round in the next 12–24 months.
- Build Investment Interest: Your internal champion will leverage the insights from the in-depth review to begin to build investment interest within the angel group in order to fund the opportunity. Since angel groups give their members the ability to make individual investment decisions, not every angel will be making an investment. In order for an angel group to make an investment, there needs to be a critical mass of members ready to write a check in order for the group as a whole to come together to make the investment.
If you’re seeking investment from angel groups, you need to focus your attention to building champions within the group. You’ll also need to set your expectations clearly; investment won’t happen in two days — you need to allow time for angels to review your business and bring together others to invest. But if you make through these steps, you’ve secured a growth-driving investment with partners committed to helping you succeed.
This post is part of the Hyde Park Angels Entrepreneurial Education Series, which brings together successful, influential entrepreneurs and investors to teach entrepreneurs everything they need to know about early-stage investment through events, articles, videos, and more. If you are interested in learning more about similar topics, register for “How to Work with Your Advisors, Board Members, and Investors” on November 12.
“Workshop Gamestorming with Sunni Brown on June 6th 2013 in Amsterdam organized by Business Models Inc.” via PhotoPin