After family and friends, startups tend to turn to angel investors to help them fund the company’s growth. To gain these investors’ trust and confidence, emerging growth companies need to make a stronger case for why an investment in the business would be worthwhile. Here is how to build up such a case.
Envision Your Needs Early On
Early on in the process, you are likely to find that a CFO can offer invaluable expertise, whether your young company has a CFO in place or needs a fractional CFO for occasional advice and guidance. This expert can, among many other responsibilities, help prepare and potentially present your startup’s pitch deck. Some entrepreneurs are comfortable doing this all on their own and may have success doing so, but there’s a perspective and expertise that an experienced CFO brings to the discussion with an angel investor that cannot be matched.
Having a CFO there when some of the tough questions get asked can be invaluable and could be the difference between an angel investor gaining full confidence in your company or leaving the meeting not being able to trust your claims. Questions about spending and controls around spending, future plans, and likelihood of future plans happening could be answered by the CFO expert, and the chief executive/founder could focus on addressing the value that the product, device, or service will bring to the marketplace.
While the profiles of angel investors vary greatly, along with their personalities, interests, and experience, go in with the assumption that they are savvy and will have probing questions about issues that may have eluded you until now. This is where the CFO can come in, to help make connections between the numbers that are being presented and the narrative you are sharing. CFOs can bridge the gap as they understand the language of both sides—both the angel investors and the senior leadership of the company—and they can help you avoid fend off uncomfortable questions early on by assessing your company and preparing it for investor scrutiny ahead of time.
Take Steps to Make Your Company Presentable, Trustworthy
Pursing angel investing is one step toward what will likely be a long journey of seeking financing. It’s great practice for eventually getting in front of bigger investors and becoming accustomed to talking about the company. But can you stand by your word? Do you have a clear understanding of the business today and how you are going to move it forward? Is your plan sound or simply hopeful? Strong records in place can help you better understand the business and also a strong foundation for the plan you are presenting to investors. Is it realistic and achievable in light of all that you know?
How to Pitch an Angel Investor
So, how do you go about finding and pitching angel investors? Networking and word of mouth are frequently the way in, and often board members and trusted advisors will be your best source for networking with angel investors. Ideally, you can get a warm introduction rather than trying to search around on your own and get over the hump of the initial reason an angel investor should give you some time in their Google calendar.
What should you include in your angel investor pitch deck, and how should you deliver it? All too often entrepreneurs want to pad their pitch deck with fluff, but investors are limited on time and will either see through the fluff or stop listening if they have to sit through a pitch that takes longer than an hour. Investors are looking for many things, and one of them is efficiency. Can you get to the point and do you know what you are talking about? A long, drawn-out presentation could indicate that you do not.
In fact just a handful of slides is all you need to get to the main points of your company and why the angel investor should invest—what your company stands for, its place in the marketplace, and the excitement that you and your employees and potentially customers have for all that is in store for your business.
Preparing for Angels: Is Your Company Ready?
The pace is fast when a company needs to pursue funding. In whatever time allows, trusted advisors with experience in successfully pitching investors can help you prepare, either by helping your company become “investor ready” or simply helping you with your presentation or carrying out the presentation for you. Being ready for the scrutiny is a big part of this task, and the process can take a lot longer than you may realize.
RoseRyan’s experts can help you save time, help you make connections, and make progress on pitching and winning over angel investors. Reach out today to learn more about how RoseRyan can help your startup.
