What Do Angels Look For In A Business? (Part 2)
What angels look for in a business is not a topic to mention briefly. That’s why we needed to maintain our first article, where we started to collect the tips to approach angels. Here we will go further to understand what angels expect to invest in a business.
If you have not seen the first part of what angels look for in a business, click here to go to the article. If ready, let’s start the second round.
A promising market
At certain times, specific markets become attractive to the angels. If you are in these markets, your chances are higher. If not, you will need to work harder to prove that your market is promising in the long term.
What are the potentials? What is your market size, and what are the barriers to be a good player in this field? You know your product or service; so let your future angels know what you promise. Being self-confident in a realistic way will be appreciated. We would advise you not to pump your promises up.
Global-scale model
Scaling a business globally is one of the most impressive steps for angels to invest their money and effort in a business. If you are a beginner in this, the first thing to do to be global-scale is doing well whatever you are doing. Make sure that your product is functioning well and you have built a brand that represents you.
Angels are not interested in dreams, so it would be best to work on a realistic global-scale model. What is your strength that will boost and support your business on the global scene?
Risk appetite
Risk appetite is the risk level that you are ready to accept. To define your risk appetite, you need to know how much risk you can tolerate while sustaining your business.
Before you determine your risk appetite, state your goal to reach. Why do you take risks, what is the demanded result and how much can you afford to lose? A higher risk may mean a higher potential, but it also can cause a higher loss. Taking risk without a realistic risk appetite may be your last move in the game, which is not very attractive to the angels.
A successful go to market strategy
It takes a lot of time and effort to create a product and make it perfect enough to present to people’s taste. There is no doubt that we don’t want to waste this time because of a wrong path to launch.
To compete with the strong parties in the market, you need to show up in the market with a strong strategy. Your recognition within the market, right when you launch your product or service, should be planned meticulously and successfully. That is what angels look for in a business before making an investment.
We recommend you to go more specific than a marketing plan and determine your go to market strategy. So you can prove that everything is under control and you are not leaving your business to chance.
A successful runway plan
How long can you survive until you start making a profit? For a new business, it is highly possible to wait for a while until the income becomes larger than the expenses. So, you should know what to do until your flight is ready to take off and convince your potential angel that your plan will work.
When you approach an angel, what matters most is to plan as many details as possible so that you can explain yourself more confidently. If you have no cash in the bank, but also no plan to make a profit in 6 months, then obviously that is not a successful runway plan. Be aware of your conditions and be specific and realistic in your plans.
Fund allocation
When you start a business, you need to be conscious of how you spend your money. Even if you don’t have a big team, making an efficient team means you will not waste your budget. Also, if you are going to use physical material for your product, make sure that you have done enough research to find the most ideal resources.
Price and performance advantage within the whole process of work is quite attractive for angel investors.
Exit strategy
When your business requires angels, it means that your business does not belong to one party. The parties involved may have the rights to exit by making it public or selling it to another company. That does not mean failure in the startup ecosystem. Actually, if your startup is attractive enough to be acquired by others, then it is a big success.
What matters for angels to invest in a startup is a comprehensive and logical exit strategy. Sectors and startups with high exit potential are absolutely more attractive to the angels. If the startup is offering a trustworthy potential to exit, they’ll tend to invest much more. That is why exit potential should always be considered and ‘considered wisely’.
Nurseli Kultufan
Angel Effect Team
