What can you do to attract small business angel investors?
You will learn
- What documentation is important to investors
- Where to find angels
- What makes a good angel
If you're still exploring your finance options and want to learn a little more about what angel investors are, give this article a read before you jump straight in to planning your pitch to attract small business angel investors.
Preparation is important for any business ambition and the same goes for raising finance. You should have at least the following documents prepared before you seek any small business angel investors:
1. Business plan
A business plan, in simple terms, is the guide for what you want to do with your business and where you see yourself in the future. A business plan doesn’t have to be overly complicated or long. In fact, investors will be looking for something that is no longer than 20 pages. You should clearly outline your business’s strategy and ambitions.
If you don’t have a business plan, the Prince’s Trust have lots of free resources, including a business plan pack and template. You can find them all here.
2. Prepare an executive summary or pitch deck
Investors don’t have a lot of spare time to devote to businesses they aren’t interested in supporting, so you’ll need to make the most of the time you have to make a great impression. One of the key ways you can do that is through your executive summary or a pitch deck.
An executive summary usually comes before your business plan and lets your potential investor know to key points that your plan will detail. Your summary should explain things like: the gap your business will fill, your target audience, the products or services you’ll offer, what will make you stand out from your competition, and a financial summary.
Your pitch deck is your chance to be a bit more creative in how you present information to potential investors. Commonly delivered in some form of presentation and clearly shows all the benefits of your business, the problem that you’re going to solve for your future customers, and the results of the research you’ve undertake in your business plan to show you know your business idea is profitable.
At the minimum, you should have a cash flow forecast to present to your potential investors. You will need to clearly outline how your funding coincides with future plans. This will help to build confidence in the investors.
For further guidance and financial support, you should check out the UK Business Angels Association, the national trade association for angel and early stage investment.
Where should you look for angel investors?
Once you’ve done your research and fully prepared all of the right documentation, you’re ready to find your small business angel investors. These are just some of the places you should consider:
1. Go online: The UK Business Angels Association represent thousands of investors and is the UK’s single largest directory. You can search through their database, just make sure you do your research first and don’t jump into the first one. There are other networks online, including the UK Angel Investment Network. By registering with these networks, you can publish your pitch online and connect with investors.
2. Make use of networking opportunities: You might be surprised by the potential investors that are already in your network, or waiting on your doorstop. Experienced individuals in your industry may be interested in sharing their knowledge and investing in your ideas. You can approach them through networking events, or even LinkedIn, as a potential mentor to start then the funding may follow.
What makes good small business angel investors?
Looking for an investor in your business isn’t just about marketing your products, you also need to make sure you’re comfortable with the angel you pick, as they will have a percentage of your business. Before jumping into any investment deal, you should ask yourself a few questions about the angel:
- What skills and knowledge could they bring to your business?
- What past experience have they had?
- Will they be bringing any useful relationships or connections to the table?
- Will they add any credibility to your brand?
- How well do you know the investor? If not much or at all, will they willing to have a few meetings before you have to commit?