Are you a cash-hungry startup looking for the right type of investor to take you to the next level? Are you wondering why no one has showed up yet? Perhaps your startup is not that visible, your idea not that original, or maybe you are just looking for an answer in the wrong places.
Eventually, in order to find your success, you must change your entrepreneur hat and start thinking like someone who wants to invest in your business. Be it angel investors, venture capitalists, family – anyone, really – you have to ask yourself ‘Why would they give me money?’.
On that note… let us start spying on the greatest group of startup investors: business angels. We would like to give you a few tips on how to think like an angel investor.
What are angel investors?
A business angel (or angel investor) is an individual who owns at least $1 million in liquid financial assets and is willing to fund fresh, risky and unproven businesses that struggle to access funding. Given their taste for danger, business angels are very sought-after and rightfully so. Their main reason for investing in startups lies in the high risk/high return theory and the opportunity to diversify their business portfolio.
Although such an investment might be a one-time thing, it provides the financial security for a business to get off the ground. Therefore, in order to secure financial assistance from a business angel, the first thing you must do is shift perspectives and learn how to think like one.
How to think like an angel investor
The main aspect a business angel considers when investing in a startup is its future; whether it is promising or not. They are in it for the long haul, which means they need to know that their investment in your business will be worth it in the end. The potential of a startup is often limited not by the entrepreneur’s knowledge, but by the lack of access to resources like cash and advice. Business angels can fill this gap and provide capital and expertise when needed most, propelling the business initiative closer to victory. To think like an angel investor is not necessarily easy, but it is not too difficult either.
People are extremely important to investors as well. A highly competent and functional management team stands for a promising company and great leadership. Angel investors like witnessing well-organized startups and actively involved personnel, because it adds a comforting touch to the high risk they are preparing to take on.
The scalability of a business is another key ingredient for angel investors. They invest to make money, therefore strong returns on investment are at the top of their list. Not all startups are scalable and finding the ones that could be is arduous work, but investors will thoroughly search and pick those who present considerable chances of succeeding.
On a different note, we know that everyone is hunting for unicorns nowadays and business angels are no exception. No one will pass the spectacular opportunity of putting money into a disruptive startup with high chances of success, even though the risks are equally high. If you are one of those businesses, your luck lies at the very core of it: the business model. Make the most of it by thoroughly refining your pitch deck and emphasize your strongest suits. Show them that you have what they want.
Now you might ask yourself if analyzing the aforementioned information will teach you how to think like an angel investor and so, make progress and secure financial help. Well, yes. Being aware of what investors want and understanding their mindset provides you with a chance to highlight exactly those points during your quest.
Competition is fierce and just adoring your business is not enough. It has to prove that it is worth the money, effort and involvement. Therefore, since it is better to be prepared rather than sorry for missing an opportunity, knowing what investors are seeking is certainly a huge advantage for entrepreneurs.
Moreover, I hope these tips on how to think like an angel investor have helped take the edge off your worries, at least a little bit.
Juggler of words and wizard of controversial ideas, I am here to share with you the world of investors as it is and as it could be.
Putting together my B.A. in foreign languages, M.A. in international development and all the knowledge acquired through Mentori de Romania and #EuGandesc, I am here to show you that holding a pen – or in this case, typing on a keyboard – clicks with me best.
