How Should Entrepreneurs Approach Angel Investors

Introduction

Angel investors are investors who provide funding to early-stage companies, often in exchange for equity. They may also serve as mentors, offer advice and introductions to other founders or potential partners. Angel investors work on their own or through networks of angel groups.

As a founder, you may have a lot of questions about approaching angel investors: How do I even get in touch with one? What if they say no? What should I include in my pitch? And so on! In this post we’ll answer some common questions about how entrepreneurs can approach angel investors successfully as well as highlight some best practices that will help improve your odds of getting funded by an angel investor group.

1. Make A Pitch

As an entrepreneur, you will have to pitch to investors. That’s just a fact of life. Pitching is a skill that can be learned and practiced, but it is also something that comes with experience. The best way to get the hang of pitching is by presenting yourself as professional and confident, but also humble enough to accept feedback on your idea or product.

Don’t be afraid to admit when you don’t know something or need clarification on a topic—but always make sure your questions are relevant and thoughtful so they don’t take away from the overall presentation.

2. Make It Personal

When you are preparing to make a presentation, you should take the time to get to know the investor beforehand. You can reach out via email or LinkedIn and engage in conversation about their interests and passions. This will provide you with insight into who they are, which will help inform your pitch as well as help establish rapport between the two of you before meeting in person.

The more personalized your presentation can be, the better! They should feel like they know you and not just another CEO looking for funding for their dream business idea (which is essentially what this is). This approach will ensure that they are invested in hearing what it is that gets you excited about starting up a company of your own because if there’s anything else going on—like them being bored with hearing another entrepreneur go on and on about all kinds of things—then maybe they won’t end up investing after all!

3. Know Your Numbers

It’s important to know your numbers. Know how much money you need, and how much money you can afford to pay back. The latter will depend on the percentage of equity that the angel investor is looking for in exchange for their investment.

Knowing your burn rate will allow you to figure out when exactly you’re going to run out of runway and need additional funding and whether or not an angel investment is actually helpful in this situation. Your “burn rate” refers to how much cash goes out each month as a result of running your business—i.e., how much cash do you spend per month? You should be able to answer this question by looking at your P&L statements, which show all income and expenses for each month during a given time frame, usually one year.

4. Build A Good Track Record

"A good track record is one of the most important things for an entrepreneur to have," says Mike Cagney, cofounder and CEO of SoFi. "That's because it demonstrates that you are capable of executing on a vision, and it also shows that investors can rely on you when they make their investment."

To build a good track record, Cagney says entrepreneurs should first do extensive research into what their product or service will be. Then, they should test the concept in real life before approaching any investors.

This way, if the idea doesn't work out as planned, no money has been wasted—and if all goes well and the new business takes off (or gets acquired by another company), then they'll already have some solid numbers behind them when they go looking for investment capital.

Entrepreneurs Should Be Prepared

You should prepare for your meetings with investors. Review their interests, background and investment history carefully. Find out what they are looking for in an investment opportunity. If you can’t find this information on the company's website or LinkedIn profile, ask them directly.

It may also be worth getting to know similar companies that have raised funds from this investor before so that you can understand their process better.

Conclusion

Getting an angel investor is a big deal for entrepreneurs. But it's not easy—it's a lot of work and takes preparation. Entrepreneurs should prepare themselves to make the best pitch possible so that they can approach investors with confidence and enthusiasm! The best way to get an angel investor is to have a great pitch. I hope this article will help you make a strong case for your business plan.