While pitching for Angel Investors one needs to look into multiple factors that influence the decision. The market potential of the product remains as the prime factor. It is important for the founders of the startup to do preliminary market research and understand the market potential, and its influence over the business. They should be ready to explain the valuable insights like the market share, number of competitors, consumer personas, financial margins, and more. In addition to the same, one needs to be ready with a proper exit plan for investors. When it comes to angel investor funding, they expect to see an exit strategy. Since many angel investors take equity stakes, the sales of shares to the company’s principal is the most common exit strategy preferred. There a few more factors as given below which influence the investment decision of Angel Investors.
Potential of the Team
The investors will check if the founding members are capable enough to handle the business or not. Investors want to know the technical or commercial competency of the founding team depending on the objective of the business. The ability to be creative or imaginative, resolve conflicts, determinant toward the goal, and flexibility are the most important factors of the founders that any investors will look for to invest in a startup.
Business Plan
A solid business plan demonstrates to investors that the founders are serious about the business and that they have given thought to plans for making money. The major things to be included in a business planar target market, financial projection, revenue channel, marketing plans and goals, competitor analysis, and projected timeline.
A business plan is a written description of the business’s future. It describes what one needs to do and how one plans to do it. It is used to pitch to potential investors and convey the vision of the investment seeking entrepreneurs. The business plan is important for a startup, for which the plan helps the founders break uncertainty down into meaningful pieces, like the sales projection, expense budget, milestones, and tasks.
Unique Selling Proposition
For any investor to invest in any business, the business needs to be different from its competitors. It is the duty of the business owners to inform the investors what makes the products or services unique in the market or better than similar products. Investors are interested in the creativity of founders as well as to work around new ideas in developing a new business model or enhancing an existing one. It is important for the founders to define their unique selling points and include them in the business plan also. Clear Investment Structure
The business owner should have a clear plan for how the investment will work. For example, if the investors are partners or shareholders, will they have the right to vote on business decisions or not. Equity, loans and convertible debt are three basic types of investment structure. The most common investment structure the angels prefer is common equity stocks for investment. It is likely your chance for getting funded is more, if you have a clear equity stock investment structure in hand. The angels like to invest in startups that have a clear investment structure for their funds
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