5 Tips on Presenting and Pitching to Business Angels

by | Jan 28, 2010 | Financing

F3FUNDIT

When it’s time to approach business angels there’s a few things to consider and a few other things to keep in mind, and a few even other things that for the most part are common sense yet entrepreneurs tend to forget about all the time.

But before you’re ready to look for someone that will assist you not only in the next round of financing for your company, but also extend a hand in helping to get the company off the ground, you should consider a few things.

For those who read this regularly, we may be repeating ourselves, but bear with us until we get to the meaty stuff.

Am I a functioning company, and do I have a product or service that I can offer for sale, or am I already selling? If the answer is yes, you can consider starting to contact business angels. If you are prior to this stage in your business development, then we highly recommend you save yourself and the business angels the time and not send anything out.

Now, since you’re ready to seek funding, you’re selling a product, and need a financial boost, here’s some very good, yet very simple best practices on….

Raising Angel Capital….

One: This may seem obvious, but apparently it’s not. Do not send your proposals to angels / angel networks that are not in your industry. If you’re a high tech company, a business angel network that deals with energy is not a good idea to send your summary to. Please stick to soliciting people to the industry that you’re in.

Two: Don’t bother sending proposals to “managed” angel funds. These fund managers are often that, just managers, they invest in companies but offer no outside help, and neither do the business angels. These types of funds tend to result in the following. 1. Companies going bust 2. Funds going bust due to poor investment decisions. 3. Angry investors.

Three: Two goes into three nicely, you want an Angel that can lend a helping hand, an industry expert on who you can count on and someone who will want to actively help in getting the company to the next level. That someone should mesh well with the current management, and aside from playing financier, should also want to mentor. This is VERY important.

Four: When sending out your proposal, executive summary, business plan – wait … actually don’t do the third one, never ever do the third one. “But why F3FundIt?” Because no one who is busy wants to read through 25-40 pages of your analysis, and I mean no one.

Send out proposals/exec summaries that are 2 pages maximum. Any more and it will probably wind up in the bin. It’s not that your sweat isn’t worth anything, your b-plan is in fact a guideline for you and your company, not for your investors. They’ll know if they like your concept in the first 3 minutes, and if something catches their eye, they’ll get in touch with you. At the same time, when you contact them, they can’t honestly say “No I haven’t had a chance to read your two page summary”, can they now?

Five: Something that we constantly hear form Angels are complaints about how poorly the company presents itself, how, after 15 minutes of speaking on the phone with an entrepreneur the Business Angels are lost as to what the hell the entrepreneur is doing. Know business terms, get accustomed to knowing your value proposition and pitching your company – practice in front of the mirror if public speaking isn’t your thing. Be clear, and be concise. Your startup will thank you for it, after all your selling it, and yourself.

Live by it, learn it, and do it. Chances are if you follow these tips and you have a good idea – you’ll wind up getting meetings, or at least phone calls.

And if any BA’s are out there, any other pet peeves you’d like to tell us about?

Seeking Investment – Raising Capital in a Dowturn

by | Jan 20, 2010 | Financing

BY F3FUNDIT

You’ve done your leg work, you’re business plan’s been refined about ten times, but it seems like at least a hundred, and you’ve spent every weekend working on it. It’s time to go out and get some funding. Great.

But there’s a rub, a business plan is just a couple of pieces of paper, it’s a guideline for you more than anything else, a place where you keep your ideas, collect your thoughts and reference your vision, mission, and business model. It’s great to use when building slides for presentations, and to send the executive summary to bplan competitions, seed funds, and angels, but the sad truth is, that if you don’t have even a semi functional product, you won’t make much headway.

So what do you do? Well, you can ask your 3F’s for money (Friends, Family and Fools), at least enough to develop your product so it’s ready for testing. Why?

Well in this climate, this recessive climate, investors are keen to keep their money in their pockets, long gone are the days of the late 90’s when a few million was given out without so much as the blink of an eye.

But how do you get people to open up their pockets for you? There’s a few ways.

1. If you’re developing a tech platform, be in internet, mobile, or other, look at your burn rate. If you can’t get out of the red within 3-6 months, the odds are stacked fairly high against you. Your idea may be profitable in a year or two, but there’s just no money out there right now to support that. In today’s climate you have to be out of the red quickly.

2. Pool micro Angels. What’s a micro angel you ask? People who are willing to invest €, £, $10-40k. They like to invest and enjoy the risk but don’t have the capital of an angel who can throw 100-300k at your company. Pool a few of these and you’ve got an investment at the capital level of an Angel.

With that being said, remember, you don’t need a check cut out for the whole lump sum in one go. Let the micro angels know when you’ll need the money and at what milestones. Do you need 5k now, and then another 3k in a month, and then 10k three months from then? Small sums are much easier for people to manage than is one lump sum.

As you’re developing your idea, be sure to keep the micro Angels informed of progress. For them the investment means a lot and they’re emotionally betting more on you than a larger Angel network.

3. Once you’ve got a functional prototype, you’re ready for the Angels, now’s the time to network and bring what you’ve worked on to them, you’re ready for the capital injection of 100-300k. Here’s however where you and your Micro Angel need to make a decision, do they stay on with their small % equity stake in your company, or do they convert it into the recently sourced cash?

If possible, use the cash for operational activities, cash at this point in your company’s life is the most important thing in the world, no cash, no progress, and bets are you might not be able to acquire a bank loan due to the stringent climate. All the same, the Angel in all likelihood will not want you to using their money to pay back your rich uncle, so try and keep the micro angels on board until you’re generating healthy cash flows, and / or are ready for Series A funding.

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