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What our members have to say...
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"We have found funding and Midwest Investment Network was very helpful in the process. We received 2 offers from interested parties. In the end we took an offer that came from a different party, but it was still helpful to create added interest at Midwest Investment Network."
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Joel Bleth - www.solarbee.com |
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Meeting the Challenge of Finding Angel Investors
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When you are interested in attracting angel investors or other types of funders like venture capitalists or equity partners, it's crucial to have a well defined strategy for justifying the project and its profitability. Convincing angel investors a new business or project is worth the risk of investment requires a well thought out vision statement that is supported by in-depth documentation proving the vision is achievable. The key is to build the project request using realistic information and data.
A frequent mistake that new business owners make is using unrealistic data or suppositions in the business plan. Angel investors have money to invest because they are savvy and financially smart. They have also seen many different proposals and can quickly spot project projections for revenue, sales growth, and other data that are unrealistic. The business plan you prepare will be read closely and the suppositions used will be evaluated against economic conditions and other business research. It's unfortunate that many new businesses are unable to get off the ground simply because the marketing and financial plans are not well thought out.
Like Approaching a Banker
One question you can ask yourself is: Would you take the marketing and financial plans to a banker if you were applying for business loans? Anyone who has ever applied for a bank loan understands the in-depth review submitted information must undergo before a bank will lend. There will be numerous forms to complete, credit checks completed, financial reviews and an in-depth review of the business plan line by line. Startup funding or business funding is approved only when there is reasonable assurance the plan is achievable.
Angel investors will perform the same kind of in-depth review by considering whether:
• The market analysis is reasonable
• Financial information is realistic
• Funding alternatives have been considered like venture capital or angel investors
• Business activity descriptions are comprehensive and reflect extensive research and planning
• Justification for the project is convincing
Making convincing arguments is important to the process. A business plan used to raise funding is a marketing plan for your business. It's the tool that sells your idea to investors. The written justifications and projections should be clearly written, organized and compelling. You will also need to be prepared to make oral presentations that communicate your business mission and vision.
Presenting Your Case
Approaching angel investors for money is similar to approaching other types of funders. The main difference is that angel investors are considering investing personal funds, but don't be fooled into thinking less preparation is needed. The fact the angel investors are loaning their own money is all the more reason for being sure that your presentation is convincing and the presented plans are realistic.
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