When you are in the process of seeking out angel investors, try to place yourself in the place of the angle investor. If you were acting as an angel investor, what factors would motivate you to give funding to a new startup?
The aspects that an angel investor will look at are management and marketing. Your angel investor needs to see that the products that you want to sell appeals to a market that is broad enough to make your venture profitable. You’ll find that profit projections for a new start up can range from the hundreds, to the thousands of dollars per year, within the startup’s first five years. On the other hand, many venture capitalists look for businesses with profit projections of $50 to $100 million dollars with its first five years.
Not only are angel investors on the lookout for certain levels of revenue produced, but they are also on the lookout for companies that can prove that they have capable and credible management in place. Therefore, you should present yourself as experienced and as capable. You should prove that your previous ventures have been successful and that you fully expect for your new venture to be successful as well. You should also prove that you have capable key personnel in place as
well.
Angel investors also want to invest in startups that effectively block others from entering their industry. They like to see a low competition factor with the industry. This is because less competition means more profits for the startup being considered.
Location is another key aspect that angel investors take into consideration, when they are considering investing in a startup. They want to invest in companies that are geographically close to them. This is because close proximity breeds interaction between the investor and the startup, so that the investors can offer guidance and help. Up to 70 percent of investors only want to work with startups that are located within 50 miles of their location.
Finally, angel investors want to see the possibility of liquidity, in the form of an acquisition or a public offering. These events are what offers the angel investor a return upon their investment. Liquidation events are a huge concern for angel investors who take a chance on small business startups.
Peter