Angel investment: your ten point guide

by Rebecca Burn-Callander - Tuesday, 2nd December 2008 - (2) comments

It's never been more difficult to track down and secure funding. In the absence of traditional routes to finance - i.e. bank loans - consider wooing a business angel.

If you’re a start-up business with big plans, you’re going to need funding to get your business growing. If the amount you need is less than £1m, there are a number of places it might come from.

There’s "bootstrapping" (i.e. funding the business yourself), persuading friends, family or fools to invest, there are seed funds and venture capital trusts, and there are enterprise capital funds and "business angels".

How can you increase your chances of getting equity funding? Check out cmypitch.com’s top ten tips on securing equity funding:

TWO PER CENT: Only a tiny two per cent of businesses manage to secure funding. If your management team isn’t strong, if your business has no track record or proof of concept, if there really aren’t adequate financial returns offered, and if there’s no clear exit route visible, then you’ll be in the other 98 per cent - so examine those areas thoroughly.

OPPORTUNITY: Demonstrate that your business really provides this – it needs a unique selling point in a high growth market.

PLAN: Be aware that it typically takes 3-6 months to raise equity funding - so plan in advance.

TRACTION: Be ready to prove your business model works!

EXIT ROUTE: Too many investors have tied-up funds they can’t monetise, so how would your business allow them to cash in? Through a trade sale or sale to other shareholders? Or maybe refinancing or IPO?

NO BULLS**T: Be honest and realistic about your business opportunity, and especially your financial forecasts. Try dividing your revenue in half and multiplying your costs by two.

TEAM: Recognise your weaknesses and ensure you build a strong team around you.

INVESTOR READY: First impressions count, and seeing as you only get one chance to impress, make sure you’re "investor ready"! Get advice before approaching investors.

PASSION: Communicate how PASSIONATE you are about your business. Make your enthusiasm infectious! If you’re not passionate, why should anyone else be?

SKIN IN THE GAME: It might be an awful US phrase, but you do vastly increase your chances if you have "skin in the game". In other words, have you put your own money where your mouth is?

Emmett Kilduff is founder and CEO of www.cmypitch.com

Picture source

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2 Comments

December 16, 2008 2:11pm
John Says:

I've just checked out both sites and it seems cmypitch.com have a number of additional services over those of Angels' Den. Martha - the video content on this site is very interesting and is certainly an innovative way to present opportunities. As an investor the pitch quality on cmypitch.com seems higher. It also seems that pitches are free on cmypitch.com wheras Angels Den charge to post opportunities. I will watch both sites with interest to see future developments.

December 03, 2008 1:59pm
Martha Says:

Ah! We're back into the Blairite soundbite form of marketing ;-) An interesting read and its always good to have options when seeking funding. But does CMyPitch.com feel they can compete with (probably) the market-leader Angels Den? Especially considering they had first-mover advantage, hold regular real-world speedpitching events and have facilitated well over 100 deals recently (I forget the true number they said)? I'll take a look around your site however. Martha