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What Angel Investors Want to Know Before Investing in Your Startup

While wanting someone to invest in your start-up, think about why someone would bear high risks and invest their hard-earned money in your start-up? Or, whether there are standards that you must meet and boxes that your start-up needs to tick for them to be interested in your start-up.

Like an inverted triangle, there is a downward trajectory of the number of start-ups created, the ones that get investment and the ones that finally become successful.

It is practical to think that not every idea can get angel investors interested. Here’s a checklist comprising all that angel investors want to know before investing in your start-up!

 

1. Money Potential-

Your idea needs to be unique but it also needs to be useful enough to generate money. Having a novel idea is useless if it won’t generate any interest or revenue in your target market.

Questions you need to be prepared for-

  • How does the company market or plan to market its products or services?
  • How much cash will be required until the company gets to profitability?
  • What are the key metrics that the management team focuses on?

 

2. Growth Potential-

Angel Investors want to know the competitive advantage you have in terms of geographical, cultural or strategic factors.

Questions you need to be prepared for-

  • How big is the market opportunity?
  • What percentage of the market do you plan to get over what period of time?
  • Why does your company have high growth potential?

 

3. Business Plan-

Angel Investors need a business plan which is convincing as well as complete. What they look for is potential and vision of the people involved in the start-up. Hence, you must have a proof of concept to show your potential investors.

Questions you need to be prepared for-

  • What is unique about your company?
  • What big problem does it solve?
  • Can you provide a demonstration of the product or service?

 

4. Management Team-

What drives a business is the people involved. Angel Investors pay adequate attention to the members of the management team, their qualifications and qualities.

Questions you need to be prepared for-

  • What relevant domain experience does the team have?
  • Why is the team uniquely capable to execute the company’s business plan?
  • What motivates the founders and how are they showing their commitment to the business?

 

5. Exit Strategy-

While angel investors are willing to make long-term angel investments, they need to know how and by when will they be reaping the returns on their investment. Be ready with a time-frame before approaching prospective angel investors.

Questions you need to be prepared for-

  • What are the alternative exit strategies that you have thought of?
  • When is the right time to exit according to you?

 

There are investors who want to actively partake in the start-up, either as a mentor or as a part of the board. While, their knowledge, connections and experience will come in handy for your start-up, know what you want and approach investors accordingly.

 

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