12 March 2013 by Lana Larder
Angel investors are wealthy individuals and Angel groups that invest in seed, start up and established companies. These investments can be riskier, and Angels want to achieve higher returns. (for example start ups are riskier than established companies)
Are you investment ready?
A ‘Cheque’ List for Start ups
- Management Team
- Target Customer
- Market Size
- Intellectual Property
- Sales Strategy
- Profit Potential
- Capital Needs
- Exit Strategy
- Business Plan
There are many things angel investors may want to know before they invest in you or your company. The following are the top 11 tips for startups that seek angel investment:
- Is your Management TEAM driven? What’s the ‘jockey and the horse’ like? Are they experienced? Are they coachable, and willing to let go of some of their control to outside investors?
- Do you know your Target Customer? Have you identified your market segment? Is there a significant demand for your solution?
- What is your Market Size? Are your projected revenues large and growing?
- Have you identified your potential Competitors? Do you understand your company’s differentiation points? Will true barriers to entry help you maintain a competitive advantage?
Nike differentiates its brand. The company has relationships with top key athletes and designs performance focused products.
Nike is an example of one of the many high performers found in most industries.
Over time, a company’s differentiation and execution matter far more than performance.
Research reports four times as much that a company’s differentiation and execution matter more than the business it is in.
All industries have leaders and laggards.
Leaders are more than likely the ones most differentiated.
5. Have you proved the concept behind your product, service or technology? Is this confirmed by data or experts? How will you commercialize?
6. Have you protected your intellectual property? Are you sure you are not infringing on patents or trademarks?
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Affordable software that helps you identify, protect and leverage your idea for a startup, invention, or business)
7. What is your sales strategy? Do you have a plan to penetrate the marketplace? How will you do this? Will your sales be done internally, with a direct sales team or with external partners? Achieved pre-sales or contracts?
8. As a start up can you demonstrate profit potential, high margins (plus 15 %), cash flow growth, and growing market share and valuation?
9. What are your capital ($) needs? What do you need to finance growth activities, including product development, recruiting key staff, launching sales and marketing?
10. Do you have financial projections? Income Statement, cash flow & balance sheet based on realistic assumptions.
11. Do you know your exit strategy?
Angels usually look for a return of at least 10 X initial investment within 5 to 7 years.