Starting a business can be a costly affair, and being able to finance the startup is often more than most people are able to do. Even after scraping their life savings together, they may find that they are unable to put together enough money to start their business. This is when they need to start looking around to find some investors who will be willing to help them finance their new business.
One type of investor is an angel investor. These angel investors are people who are looking for a way to make higher returns on their investments than they would be able to through traditional methods such as stocks, bonds, etc. An angel investor can be someone from any walk of life, but there are a few things to remember when considering an angel investor as a partner in your startup:
Some investors may want a specific return on their investment. They may not be interested in earning a percentage on what they invested in your company, but they want a specific amount that you will need to repay them for investing in your company.
Your angel investor will want a specific business plan and details on how you picture your company making a profit. If you donΓÇÖt have a clear business plan with details on the market, how you will ensure that your product meets a need in the market, and other specifics, you may find that no angel investor will be willing to invest in a vague, unclear business venture. Making a specific business plan is the best way to ensure that you can find angel investors who are interested in financing your startup.
Make sure to bring everything that you will need to make your presentation to your angel investors. Many will want to know specific details that you may not have memorized, so having all of the relevant marketing details pertaining to your new business on hand is the best way to be able to answer any questions that may be posed by your potential angel investors.
Many people feel that their sales figures are too low, so they doctor them or predict an extra high volume of sales that are inaccurate and inflated. It is vital that you present accurate potential sales figures and potential earnings, regardless of how low they are. As long as you have a reasonable and logical reason why they are so low, it will not be a problem.
You need to read the angel investors to see what the motives behind the investment are. Are they actually interested in your product and want you to succeed? Are they just looking for a way to make high earnings on their money, but donΓÇÖt care about you or your business? Understanding the motivation behind the investment can help you know how to handle your angel investor.
Ensure that the roles of each investor in the business are very clear from the beginning. Will they take an active role, or will they simply be silent partners? Making sure that each knows their role is the best way to ensure that there is no confusion as the business begins to grow.