What Do Angels Look For In A Business? (Part 1)
Angels are crucial business partners for startups and early-stage companies not only as sources of money but also as mentors. Here is why: These people are usually successful entrepreneurs, who have gone through all the process themselves or people with important corporate experience.
In short, it is a perfect idea to approach an angel to accelerate your business. Go for it! However, it would help if you consider a few things before you start planning your next step.
As we live in the age of startups, the competition to find an angel can be challenging. Well, considering the advantages of their support, it is useful to know what angels look for in a business.
Also, do not miss the second part of this article to learn more about the expectations of the angels from the businesses.
Solving A Problem
What problem does your company solve? That is a crucial starting point to approach angels and your answer can bring you millions of dollars. When you start with a product, which is your solution and then look for problems, you can return empty-handed from the journey.
Instead, do your research at the beginning to find out the problem that you can solve. Then, use your creative mind combined with a lot of information to solve this problem in the most innovative and cost-effective way.
A Promising Team
Your angel will be a part of your business. Without a doubt; the level of their involvement may vary according to their choice or your need. However, your team from the founder to the intern should be promising in their roles.
The background of each team member and your startup’s experience until you start looking for a supporter are crucial. Make sure that you share the strengths of your team and your startup, boosting your presentation by highlighting sector experience.
The future of the team is also as important as the background. You should also be open to cooperating. Working together and accepting guidance can be tricky and challenging. Mutually sharing knowledge and ideas makes a business successful. So try to find the balance between offering and accepting because that’s what angels look for in a business.
Advantage in competition
The angels are not investing for fun. They need a promising revenue for their effort and money. Probably, you will not be surprised to hear that they want to act on the side of a strong party. Your business plan, your product or service, and your background should give the signs of how advantageous you are in the competition.
For sure, you may have disadvantages as well, but it would help if you reveal the ways to convert them into advantages with an angel’s help. By doing this, you will show that you know what you are doing and what you need for improvement.
Let’s say the demand for your business is growing, and you need to amend your business plan and structure. Do you have plans to be adaptable to the changing situation? Being scalable is an advantage that angels are looking for in businesses to invest.
Never say you have no idea about future needs. Do all the research to see how much your business can grow and make a plan to expand to a broader audience. Angels usually prefer products that are easy to reproduce to reach more people like software products.
If you can only be scalable with much more investment, you will need to show a reliable result to motivate angels for being with you during this journey. If you are at the beginning phase, work on finding a scalable idea. If you have already gone far, find ways to make it scalable, which means high margins with low financial and personnel support. In this process, outsourcing and automation will be your best friends.
Your product or service has to solve a problem with an innovative approach. You do not need to focus on the fancy look to be successful in the competition. What angels look for in a business is an innovative and useful solution.
So, offer them what they are looking for, i.e. something new that will contribute to the society or at least your target audience. Focus on creating a demanded change in the world. You do not need to discover new technologies. Just a useful idea that targets a specific problem can be innovative even if it is just a combination of existing concepts.
You can do this by a functional analysis of your target analysis. Start with telling what the gap in the market is and reveal your perfect solution plan. It is the best if you have a ready-made prototype.
A promising revenue
Every investor is looking for value in business. This value is mostly financial, but it can also be about how beneficial your product or service is to the society. What is best is a combination of high financial value and a beneficial idea as it brings up a promising revenue.
For attracting angels, you may need to work on the proof that your business will bring a good amount of revenue with some support. How does or will your business make money? How much profit are you predicting? A promising revenue is one of the key factors that angels are looking for in a business.
You can find the second part of this article here to make sure you offer what your potential angel is looking for.
Angel Effect Team