26 July 2016
The Five Qualities Proven to Attract Angel Investors to Your Start-Up
Business start-ups are without question one of the most exciting professional choices you can make – but how should you secure the capital you need for your idea to fly?
You have watched Dragons Den on the television. You’re convinced that you could come up with a better business idea – and pitch it to the right people.
With so many businesses these days growing and exploding in seconds, there are thousands of investors waiting for the clever entrepreneur.
This turbo charged boom is powered by a number of factors. From tax relief for tech investors through to a glut of money streaking out of the software industry, there’s some big opportunities if you can come up with the right idea.
In many ways new business ideas are like the musical singles of the 2010s. The new everyday disposable and commonplace art-form. The streets are littered with inspiration with the possibilities available on the global stage.
Why? Because travel to any coffee shop in a well to-do area, and you’ll find absolute troves of people from all walks of life, convinced they’ve stumbled across a spark of inspiration that could light the fire of the next Facebook.
That’s why those in the know will tell you the truth. Genius doesn’t lie in the inspiration. Oh no, genius lies solely in the execution.
Taking an idea to market. Putting all the pieces together to successfully build your app or website. Slaving away on the weekends to get the details sorted and living on the breadline to fulfil your dream.
This is where the hard yards are gruellingly run, often deciding the difference between failure and a launch.
And let’s face it. You’re not alone in this race. Even though the mediocre have been left behind at this stage, becoming exceptional is an increasingly oversubscribed apex.
1. Get a Monetization Strategy
Sometimes the most creative people often forget about the most rudimentary of points.
It doesn’t matter if your app has an amazing social application, or that your website could unite people all over the globe in some kind of musical creation. It has to make money. As a wise man once said, “no money, no business.”
Angel investors view businesses like machines. They need to know that if they put X amount of money into the system, they will get X+Y cash back.
For you to flirt with the bigger investment fish in the water, Y has to be a larger, more attractive number than that offered by your closest competition.
This is before we even talk about exits. Angel investors will want to know what the end game looks like. In effect they’ll be purchasing a significant part of your company. They want to know exactly how this asset will mature over its lifespan into a glorious golden fruition.
And no, unfortunately the idea of selling your system to Google, Facebook, Twitter or another huge corporation is not a viable exit strategy.
2. The Right Team and Attitude
United we stand, divided we fall… Or so the story goes. Start-up business ideas require a breadth of knowledge and skills that are rarely found in a single individual.
Even if you are such a super proficient person, there are simply not enough hours in the day for your start-up to accelerate to its full growth potential under your own enthusiasm and power.
This means you’ll have to carefully and diligently choose the right people for your business team. This is one of the most considered decisions you’ll ever make.
Why? Because you will pay these people in shares. They’ll own part of your business and be crucial to its successes for a very long time to come, should you get it right.
To attract Angel Investors your business needs to be everything to your team. It may be a cliché, but they must have passion alongside the business attributes.
Investors want to know you are not working off the clock. They want to buy belief, drive and tenacity and the sheer determination necessary to win.
3. Knowledge is Power
Many of the best businesses started out as either a hobby or as a group of disgruntled individuals who jumped ship from a large corporate, when they felt their collective creative wings were being clipped by management.
In either instance there’s a considerable array of expertise and understanding at play, which has been generated through a genuine interest and passion.
Such a team will be familiar with their market, know about the competition and the latest innovations that are currently engaging their potential customer base. More importantly, they understand what’s needed to stand out.
By completely living and breathing your product or service space, you have absolute clarity on what’s currently lacking and where the biggest difference can be made.
Angel investors who have repeated experience of dealing with start-ups equally have knowledge of this industry. One quality that they seek over all the others is a true picture of the customer base and product potential – both of which are defined by the market.
They are aware that even when a business is armed with all the right information, the path to success is still littered with unseen hurdles and obstacles. However if you have the know how, then they are at least sure that at least the business is starting in the right place.
4. Marketing – What’s the Big Idea?
With the advent and continued stratospheric rise of the internet, promotional space has never been more cost effective. There are hundreds of trade sites, innovation publications and even social media opportunities to get your message out there.
The disadvantage of the increasingly populated media space is that it is difficult to stand out amongst the clamouring voices. So when competing for customer attention, how do you plan to attract your audience’s interest?
Your product has to have the right marketing, programmed and carefully aligned with your chosen sector and customer expectation. And additionally it generally needs to be entertaining too, with a dash of originality and creativity to smooth its delivery.
If you can crack a clever, innovative and above all original way to market your product, using the benefits and key differentiators to drive your campaigns, potential Angel Investors will be able to recognise the fundamental power of your ability to win new customers.
Ultimately whatever business you are in, an element of sales is obligatory. A demonstration of how you plan to catch the public’s imagination will also undoubtedly engage the interest of an Angel Investor, and that is the name of the game.
5. The Plan for Success
Even if you have all the other elements described in this article in place, there is one vital component that Angel Investors need to see that trumps all others.
A detailed plan, complete with timescales, milestones and the appropriate funding required at each of these key stages is essential to your own business success, even before you look at outside investment.
This schedule of key delivery dates needs to be realistic above everything else. Angel Investors are usually incredibly versed in the mathematics of business and economics, and one fault in your plan could ruin the whole opportunity.
Remember to leave in a fair amount of time and resource in your plan for unseen difficulties and challenges. Part of any successful start-up is testing your idea at every stage and being prepared to deal with the realities of the feedback you receive.
Angel Investors respect start-up companies that have clear realistic goals and are confident enough not to offer promises of over delivery.
The Final Word
One of the key points to remember when considering how to approach your start up is that many of the building blocks we have described are essential to your success.
In order to get these right, you should not be afraid to take your time getting the correct resources in place long before you even begin to imagine entertaining the investment community.
Make sure you have the right marketing. Interview as many people as possible before you choose your team. Go to your local innovation or business incubation centre to get expert advice on your business plan. Never ever settle for the first exciting option without at least exploring other possibilities.
So many of the elements described in this article are essential facets of start-up success, if they are not right then you will possibly never break out of the kitchen.
However, if you can adopt a methodical and outcome driven process then there’s no reason why your business vision and ideas cannot become an outstanding reality.
Good luck in your venture and we wish you every success.
The Bliss Investment Partners.
T: +44 20 7486 1717