Many startups never get off the ground for lack of funds. One potential solution is to seek out an angel investor: an individual or business that that can provide startup capital in exchange for shares in the company. Key factors to consider in finding an angle investor:
1. Do I Need An Angel Investor?
Angel investment isn’t appropriate for every startup. Determine whether you need external funding, because sometimes you may be able to get by with other sources, or your own internal sources of funding.
2. Understand The Drawbacks
Once a business has established and requires equity investment, it’s important to be aware of what it might mean for the future of the operation. Angel investment can often mean a slight loss of control over the direction of the business to the new shareholders.
3. Know Where To Look
There are a number of equity investment networks in Australia open to pitches from entrepreneurs – but rather that it’s hard for investors to find the right company to back.
4. Define The Value Proposition
Once aware of the benefits and risks, business owners need to begin work on how they’ll present the business concept to prospective investors. The most important factor here is to make it absolutely clear how the idea will be valuable as a business.
It’s not simply enough to wander into an investment meeting with an idea scrawled on a napkin. Investors will want to see that work has been put into the concept already. They need to have something tangible about the product that they’re developing. They don’t need the perfect product; part of getting capital might be that they need it to develop the product properly. They need to substantiate why the business or the idea that they’ve got is worth investing in.”
6. Establish Risk
Part of this substantiation is to show that you’ve got a clearly defined conception of the risk involved. As a person who’s seeking investment, you need to demonstrate to the investor that you have addressed all of their key risks and opportunities associated with your venture, and that you’ve really got a clear plan for what you’re going to do.
7. Plan How To Spend Investment
The proposition will have to detail how you plan to spend the investment, as well as demonstrating how the business will generate its own revenue.
8. Don’t Make Bold Claims
Do not to oversell the idea, as experienced investors will likely see through any embellishment. Instead, you need to be realistic and objective, while still playing up the value in your business.
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