One very limiting, yet popular belief among struggling entrepreneurs is that funding is not accessible to them. Not true. There's a lot of money out there in the hands of angel investors seeking the right opportunity. If you have a great concept, the timing in the market is right, and you have the grit to do what it takes, odds are strong that someone may be interested in investing in your company.
Begin by getting the word out to your network and attend events or conferences where angels and/or entrepreneurs gather--the smaller the venue, the better. Your local angel community will often host events at universities and other academic and creative spaces. Bumping into the right investor and giving a quick elevator pitch (90 seconds is about all you've got to get their attention) is a great way to start the conversation.
Jeremy Larner has been investing in businesses for over ten years and has helped finance over 100 startups, including Dollar Shave Club and Postmates.com. He is also the Founder and President of JKL Worldwide, conducting procurement and investment strategies for a select clientele.
Larner suggests that when you gain a few prized minutes with an investor, you stay true to what he calls, The 10 Commandments For Pitching An Angel Investor.
1. Know your numbers.
If you stammer through or stall out while explaining the size of the market (not something you googled five minutes ago), or you fail to justify your projections, it's game over. "I will push back and challenge your assertions; I want to see the gears work," says Larner. Knowing your numbers, and why they are realistic, is an essential part of your pitch.
2. Treat them as a person, not an ATM.
"If all you can see is my money, then we are not a good fit," says Larner. "I need to understand what role you ultimately want me to play in the company. You should have clear reasons for why I'm an ideal fit for your project." You can go to a bank and get a loan, the benefits of an investment go far beyond the financial assistance. A good angel investor offers incredible value based on their experience.
3. Speak to your prospective investor's passions.
The best way to achieve this point is by becoming familiar with the investor's past, this is why it is beneficial to find someone through your network. If you can show an investor how your current opportunity fits in with their past track record, you might just spark a passion for your project. Angel investors want to fund investments that match their passions and their investment strategy.
4. Enter with the exit in mind.
Walk the investor through how you see the complete investment cycle working. "Imagine you have my money and phone number, now what?" Larner asks. Think through questions like, where are we going? How do we get there? How long will it take to get there? What are the biggest obstacles and how do you compensate for them?
"You need to walk me through how I'm getting my money back and gaining a return on my investment that's worth the substantial risks I'm taking," says Larner.
5. Help them know they can trust you.
Angels don't invest in companies, they invest in people. The people running your business will be directly tied to an investor's reputation if they choose to invest. Help them understand why your people are the best people for the job.
6. Successful angels flock together.
Good news. If you found one angel investor, you've found a flock. Even if the investor you target does not invest, they may still try to connect you with someone in their circle who's a better fit.
7. Know their investment history.
Don't waste your time by pitching an angel that has invested in a competing business. Do your due diligence. Some angels will take your meeting so that they can pass on your knowledge to their existing business partners. It's evil, but this is war and people don't always play nice. Do your digging before you spill the beans.
8. Dress for the culture.
If you're presenting a young, hip new brand that you expect others to be excited about, don't wear a stove top hat. While that may seem hyperbolic, your attire will communicate the vision you have for how the brand will be perceived. Your clothing should reflect your vision and your audience.
9. Value industry experience over education.
"I don't care if you have fifteen degrees," says Larner. "Of course, an education is always an asset, but I want to know what you have accomplished since then, or during." Larner believes that the best entrepreneurs are individuals with hundreds, if not thousands of hours practicing their craft. Remember, Mark Zuckerberg created Facebook from his dorm room.
10. Tell them about past problems ahead of time.
We all have a past, don't try to cover your tracks. Tell the investor about the things they are going to find while performing due diligence. Present any past issues as learning opportunities that helped you change how you operate. Emphasizing the lessons learned and examples of improvements made is a great way to minimize the harm that a past incident might otherwise cause.