Whether it’s a startup looking to make it to market or a small business looking to scale, angel investors play a huge role in making things happen. These are individuals (or a group) who provide capital for a company at its early stage. In the US alone, in 2018, angel investors funded more than $23 billion into businesses. Given how critical such investments are, here is what angel investors look for when investing in entrepreneurs and their businesses.
A Good ROI
While investment and donation might have their similarities, the former is done with an expectation of a good return on investment while the latter expects nothing. An angel investor keeps his/her ROI as the main criteria when deciding whether to invest in a business. While there are different types of investors with various strategies for investment, they all have a shared interest in investing in a company, taking it to great heights, and then profiting off the investment. By proving that a business will give a good ROI, it becomes easier to secure money.
A Rock-Solid Business Plan
Angel investors are not foreigners when it comes to success. They know what makes a company tick. An entrepreneur or business must show them a rock-solid business plan if they want to chance a stand of getting an angel investor on their side. This plan should include financial projections, marketing plans, and details about the competition. It is mainly to ensure that they are investing in people who have a clear vision of what the end goal is and who stand in between them and success.
Well-Equipped Management Team
Rarely do angel investors invest in a person. While that does happen in exceptional cases, there has to be a strong management team in place. The management team is a clear indicator of whether a business is trustworthy, competent, and worth the investment. A good management team includes leaders who have experience in different aspects of a company, namely, HR, manufacturing, sales, accounts, and research.
Clear Exit Strategy
When an investor invests into a company, they always need an exit strategy. These exit strategies usually need to be presented to the angel investors by the company members. A comprehensive risk analysis follows this, which instills confidence that exit and risks are covered.
These are the main points to look out for when aiming to secure angel investment. It always makes sense to grab hold of an investment advisor representative if required. Getting angel investors on board will help snowball a company into success.