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Oct 27Glen Katlein

Angel Investor Tips

Oct 27Glen Katlein

Article excerpts by Partner, Debra Cristein

After Debra attended the MIT Enterprise Forum last week on tips for securing Angel Investing she had the following tips about securing Angel Investing:

  • Dilution may seem painful, but a small percentage of something is better than 100% of nothing
  • You need a team to grow a company successfully and Angels don’t want to see a one-man show
  • Don’t let your valuation get too high before seeking funding. High valuations can keep Angel Investors away
  • Convertible debt in the early rounds can be preferred because it defers the pricing question
  • Especially if you are planning a VC round of funding later on, the Angel Investor will prefer preferred debt
  • Make sure that your Angels are with you for the long run, that you can approach them for future rounds and they have the staying power for the long haul – you won’t have to woo new investors and it also is not a good sign if your original investors are not still in the game
  • Ask for enough money to last for a while – you don’t want to go back to the well too soon
  • Your investor is not interested in providing funds to pay you the salary you made before you quit your corporate job – they want to invest in product or service and they also want to see that you have some skin in the game

 

In addition, entrepreneurs must be well prepared to clearly and concisely present their business concept and strategy to gain investor enthusiasm and confidence.  Guy Kawasaki offers great guidance –  http://blog.guykawasaki.com/2005/12/the_102030_rule.html#axzz0XtZP1AG9http://blog.guykawasaki.com/2005/12/the_102030_rule.html#axzz0XtZP1AG9

  • Ten slides. Ten is the optimal number of slides in a PowerPoint presentation because a normal human being cannot comprehend more than ten concepts in a meeting—and venture capitalists are very normal. (The only difference between you and venture capitalist is that he is getting paid to gamble with someone else’s money). If you must use more than ten slides to explain your business, you probably don’t have a business. The ten topics that a venture capitalist cares about are:
  1. Problem
  2. Your solution
  3. Business model
  4. Underlying magic/technology
  5. Marketing and sales
  6. Competition
  7. Team
  8. Projections and milestones
  9. Status and timeline
  10. Summary and call to action

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