When you welcome an angel investor into your company, you are effectively saying that you are ready to give up some of the equity interest which you have on your company – which is a big decision. Therefore, it is important that you should have some knowledge about angel investors. Here are some questions which entrepreneurs would be interested in when venturing into this form of business;
1) What is the average sum which most investors put into a startup business?
While the funds which are put into a startup business would vary, the ranges would usually be from £25,000 to about £100,000. However, there is no limit as to how much an angel investor can decide to spend on your company.
2) What are some of the most important things investors pay attention to?
Before an investor would agree to fund your startup business, here are some points which would catch his attention;
- They would most likely be interested to know just how passionate or determined the owners of the business are in growing it
- They would want to know if the business can endure as they would no doubt be interested in refunding it if progress is made
- They would also look at the market and the chances of your startup business blossoming into something fruitful
- A business plan which has been carefully put together would surely catch the attention of any angel investor out there.
- They would also be on the lookout to see if they can spot any rights which would lead to intellectual property in the long run
- They would also yearn to see just how valuable the company would be in the next few years.
3) What do angel investors look out for when they first meet an entrepreneur?
They would look at for some of the following;
- A detailed plan or persuasive detail which would serve as motivation to invest
- A summary of the vision and the mission of the company. In other words, they would love to see an executive deck
- A demo or a prototype of how your business plan intends to succeed if they fund it
- They would also love to see some of the early clients that you have served within your business.
4) How long will the negotiations take before funding is received from angel investors?
The truth is that you cannot have a specific time period in mind for the duration it will take of raising funds through angel financing.
Just make sure that you have your head down and focus on doing things which would make your business look more valuable. Raising angel funding does take time and work, so you should be prepared for that.
5) What type of questions would the angel investors be more likely to ask?
Some of the questions which you can expect from Angel investors would include;
- How much funds do you intend to raise?
- What do the gross margins look like in your business?
- How long do you think the capital which you intend to raise would last?
- Do you have any idea of the projections of your company when it comes to its finances?
- What are the assumptions you have made that makes you believe your financial projections are correct?
- Unit economics? What are they?
- How large or small would your burn rate be per month?
6) When it comes to marketing and the rate of acquisition by customers, what are the likely questions which would be asked?
- What would the marketing campaign look like for the company?
- What do you feel is the PR strategy for your startup?
- What about social media strategy? What are your plans?
- What do you think would be the cost of an acquisition by a customer?
- Have you projected what the customer life span would be with your company?
- What form of advertising would you undertake?
- What would be the duration from the first contact the customer has with the product up to the point that a sale takes place?
7) What questions would most likely be asked when it comes to management and the owners of the startup in general?
- Who founded the business and where are the core members of the business?
- What form of experience do these members have when it comes to running this form of business?
- When would you need to make certain additions to your team, now or shortly?
- Why should we believe that the team can successfully carry out and achieve the goals of the business?
- What is the number of employees currently working with you?
- What the motivation behind the business?
- What are your plans in the next 12 months when it comes to scaling your business?