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Angels invest in around 55,000 startups each year versus 1,500 companies by venture capital funding. Entrepreneurs need to find a way to get sales without funding. If a company gets funded at all it is like to be from an angel who is not part of an investment group. If entrepreneurs are only pitching to angel groups, they are pitching to only 6% of active angels.
Be realistic about what can be raised when you open fundraising by utilizing a crowdfunding platform. Take a campaign online and encourage non-accredited investors to use a crowdfunding platform to show their support, manage the volume, and market your business.
Entrepreneurs still need to approach angel investors offline for large amounts of capital. The unlikely angels are people who have full-time jobs with no time for due diligence and often make decisions through trusted referrals or based on gut feelings.
The plus side is that they represent a segment of the capital that can fund your business who are not hounded by other deals regularly. This means your company will be considered individually and not against 20 others like it would be if you were in an angel group. Read on to learn how to get the attention and money from an unlikely angel investor.
How to Raise Startup Funding from Unlikely Angels
Write a business plan
Business plans are very valuable and should always be presented to show that you are serious and have done your homework. Always include a compelling summary page with visual elements that promote your company. Add video too if you are delivering your business plan electronically and keep it under one minute. Another that is longer than that will lose the interest of those with short attention spans.
Do not use acronyms
People outside of your industry will be reading your materials and it is intimating to read something has acronyms, unless you define them. You do not want an investor to not understand what you are saying because they will say I do not know enough about this industry to invest in it.
Always be pitching
Be willing to put yourself in as many opportunities as possible for people to ask what you do. The best way to do this is by asking others what they do first and be curious about the answer. Then naturally they will follow up by asking what you do. Be prepared with your one sentence answer and follow up with saying that you are raising funds from private investors to get started.
You can do this conversation anywhere, not just a networking event. The idea is to let everyone know what you do and that you are looking for capital so they can either invest in you or make introductions to people who will.
Have an event
Potential investors get to see that others are excited about the product too and it reinforces their own feelings. Get a venue and select a time to have a pitch party. Get people excited about the prospect of a new company opening.
Go for the emotions
Investors ultimately make their decision with their gut. What they will be buying into is their feeling about the entrepreneur and passion for the product. Do not undervalue the emotional aspect because it takes 100% to move forward the decision to invest. The shorter the pitch, the more it should appeal to emotion. Only then you will be given the opportunity to support their excitement with logic.
Be transparent
The amount of detailed due diligence done by an angel or angel group can seem intrusive, you are getting into a long term relationship and full disclosure is required. Everything does not need to be disclosed right away but the following information should be ready to go just in case:
- Business plan
- Financial model and balance sheet
- Management resumes and organizational chart
- Customer references
- Personal references
- Social security numbers
- Grants
- Contact information
Know your numbers
Someone who holds the title CEO needs to know the entire business inside and out and that means knowing the numbers. Most investors prefer to invest in a business, not just the product.
Invest in your business first
Angels are more likely to invest in entrepreneurs who have invested in their own companies first or gotten friends and family to buy into the idea.
The Bottom Line
An angel investment is not just a financial transaction, it is the beginning of a long-term relationship. Getting funded is not the end goal. It can take a lot of time and should only be done when your business is ready to scale.
