Preparing for Angel Investment

Photo of an L-SPARK meeting
Image Source: BiteSite | Casey Li

A typical angel investor is approached by hundreds of entrepreneurs each year. Many of these startups are turned down. And it is not because of the idea, but rather the execution.

Let me explain.

Sophisticated angel investors who have already engaged in a number of investments, tend to have built a pattern for selecting a startup to invest in. A part of the pattern will include evaluating the idea, market size, and determining how they can help through their rolodexes. However, investors will always look first at execution and who on the team will make it happen.

Execution

In order to gain interest from strategic angel investors you must demonstrate that you and your team can execute. Clearly define the roles each of the members of your team play and explain why they will add value to your startup.

Also include what you have already executed on with metrics. Repeatable success will inevitably speak volumes for the viability of your product’s future growth potential.

Sweat Equity

Some of you might say, execution hinges on a startup raising dollars in order to prove traction. How can I grow my team without the capital to pay new hires?

You are correct, early dollars are important to create a runway for your traction. However, these days, metrics are more important and so you have to be prepared to put in the early sweat. Put your nose to the grindstone and chip away at earning some credible traction and the strategic angels will follow.

Family & Friends

Finally, for those that are not able to bootstrap their business and/or attain enough R&D funding and grants, I suggest considering a Family & Friends round.

If you go this route it is quite important for you to understand and select specific Family & Friends to be part of your round. Choose wisely, and make sure they know that while this is a risky investment, there is an upside. Involve them in the process, not only with dollars, but with advice. You would be surprised how much you are able to learn from them. Throughout the entire entrepreneurial journey, listening to the world around you is key.

On one of my trips to Seattle, I was lucky by coincidence to be in the same hotel as Dalai Lama. Till today one of his quotes remains with me.

“When you talk, you are only repeating what you already know; but when you listen, you may learn something new.” — Dalai Lama

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