Angel investors are a great alternative source of early stage funding, but knowing how to pitch to angel investors is just as crucial as their investment. All investors are different and will have their own reasons for making investments that will shape their portfolio. But a lot of what the investors in our GC Angels syndicates and venture capital firms generally are looking for in a pitch from start up businesses will be the same.
Finance specialist, Ian Dixon, shares his thoughts on the 4 key areas to consider.
How to apply for Angel Investment
Before we go about discussing how to pitch to angel investors, you should be aware of how to apply for angel investment. Secure financing is the first big step in the life of a business and finding angel investors for a small business has never been easier.
There are many avenues you can take to find potential angel investors who will help with financing a small business, including dropping in to angel investment networks, where you can engage and meet with investors online before meeting with them in person. The networks are usually very competitive, so be sure to make your business stand out from the crowd.
Take your business to social media and attract interest through platforms such as TikTok, X (formerly known as Twitter), Instagram, and many more that are full of investors waiting to see a concept that stands out.
Finding angel investors can be as simple as attending networking events, speaking with fellow founders, or competing in start up events. The best way to find interested parties is to take all the chances you can, so be sure to maximise your chances of angel investment by exploring all methods of promoting yourself and your business.
How to secure Angel Investors
Knowing the tips for making your business stand out can help you know how to secure angel investors or even how to raise angel investment funds to take your business to the next level. Here are four key areas for you to consider.
Momentum
Investors dream of finding the next big consumer product, and without momentum driving your sales, getting an Angel interested will be hard. If you can demonstrate evidence of customer adoption—number of users, channel partners, sales at events, social media response—that illustrates how you can drive revenue scales, investors will be keen to know more.
Management
A critical part of any pitch to Angels is that they buy into and have faith in your management team. You don't have to become best friends with your investors during the pitch - there may even be friction - but you need to really prove to them that you and your team have the experience and expertise to make this business a success.
Market
There has to be an audience to buy your product; or there will be no successful product. Your Angels need to know just how you will be able to penetrate a potentially crowded market with your product or service. Angels are looking for fast moving and large markets which is why tech and digital start-ups are so attractive; because they offer the potential to grow much faster and bigger than say an FMCG product. Think global rather than national too; online markets now open this up to more start-ups than ever.
Money
Most Angels will be looking to own a significant stake in your company and if you start doing well they may want to buy more. It is important to know how to raise angel investment to ensure you get the best deal. Increasingly investors are spreading their funds across a range of companies, something that co enables them to do by matching them with other Angels in syndicates that share the risk and the reward. It is human nature that an investor will be more interested in you the more he has invested but it is up to you to make your business worth their time and money.
