subject: 3 Things You Need to Know Before Seeking an Angel Investor [print this page] 3 Things You Need to Know Before Seeking an Angel Investor
If you are part of a new startup community on the internet, there is one question that you hear quite often: What do I need to do to get an angel investor to fund my small business?
If you are in this same boat, and are seeking an angel investor for your small business, there are a few things you must do to ensure you attract angel investors.
First, do you have a sound business plan? Many people will start a business without a business plan, strategy, focus, and even a clue. Passion alone will not ensure you success. That is why a business plan is so important. A business plan will keep you on track to achieve the purpose of your business and help you from straying off course. Stay the course! If you don't have a set direction, then I suggest you get one. They aren't hard to come by, either. Any marketing student at your local college or university can assist you in writing one at an affordable price.
Second, do you have sales/orders? This is probably one of the first questions an angel investor will ask you. Again, passion to do business is not a good enough reason for someone to hand you their money. A good investor will ask you how many sales your venture had in the previous year. If you had little to none, chances are you will not lure any investment your way. Sales show that you have a viable business, and orders show that you have future business on the horizon. No past plus no future equal no funding.
Third, can you explain where you will spend every dollar of the funding? Not only does an investor want to know if you will make money, but he will want to know what you plan on doing with his money. Giving an angel investor an "I don't know" will not get you very far. It will make you look unprepared for the meeting, and that you aren't serious about the request for money, and that you have just wasted his time. Always have an outlined plan of where you will spend the money, whether it is on marketing, inventory, or employees, and make sure you can justify where you plan on spending every single dollar.
Getting an angel investor does not have to be hard. At the same time, you need to be prepared, and to be ready to answer every question that the angel investor may have. Do your homework, and have all the information atyour fingertips, so you can answer the questions, and share it with confidence.
