Part Time CFO Inc.

Capture the Attention of an Angel Investor

You need to capture an Angel Investor’s attention immediately with either a great elevator pitch or Executive Summary. You only have one shot so spend the time perfecting your pitch. Make sure your pitch includes the basics; description of the market, what problem the business solves, a successful track record and a experienced management team.

Here are a few mistakes to avoid when pitching an Angel Investor

• You don’t explain what problem your business solves

There has to be a problem in the marketplace that you are solving or customers will not beat a path to your door. If you can’t present a compelling reason why people will buy your product, then you have lost the investor as your partner. Don’t spend all the time talking about your product or service, talk about eliminating the problem they are facing. People buy solutions to problems. Don’t tell them how lawn fertilizer works, tell them how you will fix their lawn.

• You don’t explain what/who your market is or how big it is.

Potential is what motivates Investors. They are looking at questions such as, how big a market share can I get and how big is the overall market. Do the work and make yourself knowledgeable about the size of the market. The investor may be new in this particular market and initially look to see how well you know the subject and have done your homework. If he knows the market then he will be looking for verification that you know what you are doing so he feels comfortable in investing.

• Your presentation is too long and includes too many facts and numbers

The most important thing is to get your story across in a compelling manner. You have to capture the Investor’s attention. Make it personal or something that an Investor can relate to. “Have you ever been in a situation where….”

Many entrepreneurs will use statistics to sell their business. While revenue and profit figures are important, leave out the numerical proof of market size and back-up for your build up of revenue etc. Keep the presentation focused on the sizzle. The reams of facts can be saved for later once you have “landed the fish.”

• Your projections are hockey stick forecasts

Start-up or early stage sales projections don’t carry a lot of weight with investors as they are not supported by real sales history. Sell the potential. To help make up for the fact that you might not have a long sales record, it’s better to explain the benefits the business will provide customers and how the company is different from the competition.

• You are not flexible with the business plan

An entrepreneur who is too attached to their plan and does not listen is a huge red flag for an investor. An Investor wants to be a partner and make suggestions based on his own experience. If these are going to fall on “deaf” ears then it is his money and he will walk.
For example, if there’s a new way to consider packaging or selling a service, a true entrepreneur will seize the opportunity to make money. Being flexible and willing to accommodate customers when they want your service in a slightly different way than you already offer is good, The goal should be to make your product as sell able as possible.

• You discuss potential contentious issues too early

While it might seem natural to explain how much ownership you’re willing to offer investors, don’t do itin the initial pitch. It is like the sticker price on a car, If it’s too high, you don’t even talk to the salesman,you just walk off the lot.

Details about who gets what percentage after an investment, generally come up after an investor has finished researching your company. If an investor asks about ownership terms early on just say you are flexible. Remember, your goal in the pitch is to build a relationship with the investor. Get them to fall in love with your idea first.