Angel investors are one of the most common forms of financing in businesses and are an alternative to business funding companies. At the same time, they reject three-quarters of the business proposals that come to them. They always look for new chances which are worth investing in. They look for certain common attributes in the businesses and new proposals. Below is a discussion on the main features that the angel investors look for in new ventures.
The Possibility of Solid Return
Angel investing is a risky business. Hence, they have high expectations when they invest the money. They usually hope that they receive a higher return of investment than when they invest in the stock market. Keep this in mind when you make proposals to the angel investors regarding new business or startups.
A Solid Reason to Invest
Always remember that most angel investors are successful entrepreneurs themselves. They also take pleasure in helping others grow and to create a new enterprise. There are different types of angel investors such as the hedonistic, the economic, and altruistic investors. While the altruistic angel might be interested in growing their community, the hedonistic angel investor is more driven by the thrill of creating something new. Make sure you pick the right kind of investor. Prepare your pitch according to your preference of the investor.
A Trustworthy Management Team
An able and experienced management team is a prerequisite for receiving investment from angel investors. They are investing in people. Hence, they have to be convinced that those behind the venture are knowledgeable and capable of leading their team to success. They have to possess the right skills in marketing, selling, managing people and resources, and accounting.
A Convincing Business Plan
Angel investors look for plans that are complete with possibilities of succeeding. They look for a vision you have for the company and the thought you have given for the details of the plan. Besides, they look for the marketing plans, financial projections and other specifics of your project.
A Business Structure That Suits Investment
While some investors may assist the businesses through loans, a majority of them look for a minority equity ownership of the businesses. This means your business should have a stable structure that allows them to share a portion of the ownership. A majority of the angel investors look for a formal shareholder’s agreement which clarifies the nature of the investment.
Above are the main attributes that angel investors look for in businesses.