Angel Investing 101
Angel investors are individuals who meet the SEC definition of “Accredited Investor”, and invest in early stage ventures by reserving a portion of their total investment portfolios to provide emerging companies with seed and startup capital through direct, private investments. Their goal is to achieve higher returns than the typical public markets provide. Most angels are active investors who contribute their time and experience, as well as offer introductions to valuable contacts essential to the company’s success.
Is angel funding right for you? See the checklist below:
Management team. Is your team experienced, driven, coachable, and willing to cede some control and decision-making authority to outside investors?
Target customer. Do you have an identifiable market segment? Is there a demonstrable and significant demand for your proposed solution?
Market size. Are the projected revenues in your product category large and growing? Is the concept / product / IP scalable?
Competition. Have you identified potential competitors? How do you differentiate? Are there barriers to entry in your space?
Technology. Have you proven the concept behind your product or technology? Can this be confirmed with data or by objective experts? Have you built a comprehensive business plan to commercialize the technology?
Protected intellectual property. Have you consulted with an experienced, reputable attorney? Have you performed an exhaustive search to be sure that you are not infringing on patents or trademarks held by others?
Sales / Marketing strategy. Do you have a plan to achieve widespread market penetration for your products and services? How will you do this effectively? Will you create an internal, direct sales team, or will you rely on external channel partners?
Profit potential. Can you demonstrate how high margins (+15%) and consistent cash flow growth can be achieved?
Capital needs. Do you understand your capital needs and how will funds be used?
Financial projections. Have you developed reasonable, realistic financial projections including an income statement, cash flow and balance sheet with supporting spreadsheets?
Exit strategy. Do you have a clear expansion / exit strategy that will enable angel investors to generate a healthy return within five to seven years?
Business plan. Have you developed a comprehensive business plan that articulates your key business strategies for how you will succeed, endure and grow your venture?
Angel investors are individuals who meet the SEC definition of “Accredited Investor”, and invest in early stage ventures by reserving a portion of their total investment portfolios to provide emerging companies with seed and startup capital through direct, private investments. Their goal is to achieve higher returns than the typical public markets provide. Most angels are active investors who contribute their time and experience, as well as offer introductions to valuable contacts essential to the company’s success.
Is angel funding right for you? See the checklist below:
Management team. Is your team experienced, driven, coachable, and willing to cede some control and decision-making authority to outside investors?
Target customer. Do you have an identifiable market segment? Is there a demonstrable and significant demand for your proposed solution?
Market size. Are the projected revenues in your product category large and growing? Is the concept / product / IP scalable?
Competition. Have you identified potential competitors? How do you differentiate? Are there barriers to entry in your space?
Technology. Have you proven the concept behind your product or technology? Can this be confirmed with data or by objective experts? Have you built a comprehensive business plan to commercialize the technology?
Protected intellectual property. Have you consulted with an experienced, reputable attorney? Have you performed an exhaustive search to be sure that you are not infringing on patents or trademarks held by others?
Sales / Marketing strategy. Do you have a plan to achieve widespread market penetration for your products and services? How will you do this effectively? Will you create an internal, direct sales team, or will you rely on external channel partners?
Profit potential. Can you demonstrate how high margins (+15%) and consistent cash flow growth can be achieved?
Capital needs. Do you understand your capital needs and how will funds be used?
Financial projections. Have you developed reasonable, realistic financial projections including an income statement, cash flow and balance sheet with supporting spreadsheets?
Exit strategy. Do you have a clear expansion / exit strategy that will enable angel investors to generate a healthy return within five to seven years?
Business plan. Have you developed a comprehensive business plan that articulates your key business strategies for how you will succeed, endure and grow your venture?
