Top Three Reasons Angels Don’t Invest StartUp Capital
If a potential Angel investor is going to meet with you and listen to your pitch then the capital you’re seeking is yours to LOOSE.Angel investors have every reason on earth to not write the check. Make sure they have the Money, Understanding, and Belief. Be relentless. You’ll get the check.
1. Angel investors don’t invest when they don’t understand you, the business, and/or the deal.
No one you know or ever will know is just writing a check for a few thousand or a few $100k if they don’t understand what the hell is going on with your deal. So you just invented the chemistry of cancer. Yes? Who will understand that? Well angel investors don’t have to understand in your terms - but they do have to understand in their own way. In fact if they’re successful angels - they MUST understand in their terms and dimensions.
So the problem here is - how do you convey a vast amount of your expertise in a simple way? Simple and vast don’t usually go together. Be prepared. Make simple and vast combine through carefully created documents that achieve that purpose.
- No more than 20 page presentation.
- Capitalization Table, Cap Table.
- 1-1/4 page Memo.
- Term sheet.
- Receipt (in case you get lucky).
2. Angels investors don’t invest when they don’t believe.
Who do you know that would write a check for any value in something in which they don’t believe. Now we’re not talking about your brother, or mother here. We’re talking about a third party person - someone you’ve never met before. If they’re going to write a check for $2,500 or $25,000 they have to BELIEVE.
So now you ask believe in what? Well there’s three key things angels must back to be believers.
- Angel investors believe in you.
- Angel investors believe in the product.
- Angel investors believe in the market.
3. Angel investors don’t invest when they don’t have the DOUGH.
The most important thing you can do is qualify the potential Angel investors you’re after. Lots of potential startup investors get pretty excited with cool things they see. They like being included - you know part of the group. But at the end of the day - so many don’t write a check.
If you spend all your time chasing investors who just don’t have the money and none of your time chasing the ones who do - how much are you going to raise? Zero. (see the Delta Effect - coming soon)
So how do you qualify - you gotta ask questions. Here are the top three questions to ask - and ask them pretty near the beginning. If you don’t like the answers keep the meeting short - if you like them a lot - do whatever it takes to close the deal.
- How much are you thinking of investing?
- Timeframe to make that investment?
- Have you invested in a startUp before?