I was hired the other day to write a business plan for a client who sought angel investment for his hitech business. He gave a me a list of items he wanted me to prepare including complex financial memorandums, share structure documents, and complicated exit strategies.
Hmm, now I’ve presented before a few Angels and that’s typically not how it’s done. Sure you need a quality Business Plan and all your financials need to be there, like your income statement, cash flow analysis and balance sheet but is it necessary to provide all this in the first meeting? The answer will surprise you.
If you have ever seen the Dragon’s Den or Shark Tank on TV you may notice something interesting. People give a ‘pitch’ and even if the plan is a bit doubtful often the shark or dragon will invest because they ‘like the presenter’.
The answer to all the documents in the first meeting is NO. My advice is meet the investor and come with nothing but a warm smile and enthusiasm. If you are an anti-social boob no amount of documentation will get you through the next step so pick your presenter and pitch carefully.
The angel is looking for 4 things:
is the idea simple enough for him to easily understand?
does it solve a problem?
is the market big enough?
do you, the entrepreneur have the right people behind you and that includes are you the right person to lead this?
The Angel or investor wants to hear an exciting story, they want to check you out and they want to know how they will make money, period.
It’s like bankers look at the Executive Summary and if they don’t get it the first read, the loan is not going to happen. Same with Angel investor, venture capitalists or whatever you call them, they won’t invest if you don’t have the likeability quotient.
Get past that and the second meeting is all about the Business Plan, financials, forecasts, management plan and all the goodies that will define your company. Tell them how much you need but let there be a discussion about how it will be structured so you don’t sell the farm.
Failure to get an investor to sign on the dotted line may not have anything to do with the product or service of your company. If your third meeting fails to materialize the likely reasons are:
you and/or your team are too inexperienced
your valuation of the company is too high for the investment you asked for
The bottom line? Get help with your plan and your presentation before pitching someone for money.
I can Help!