Three Tips On Raising Money From An Angel Investor

Matias Mäenpää, angel investor and serial entrepreneur (Photo ©

As an angel investor, I’ve met hundreds of entrepreneurs in the early stages of their startups. As they pitch their USP and explain why I should invest in their businesses, they are continuously lacking a few fundamental aspects. I’m left with a difficult decision when analyzing whether an investment would be beneficial. Therefore, I recommend that all startups, especially those in the early stages, increase their chances of overall success by focusing on the following three points when pitching.

Pitching your team, too

A large number of early-stage startups will invariably pivot, which means that the core business idea will change. Still, at least half the time, founders focus on pitching their business idea, product or service. You have probably heard that it’s the people that determine success. Normally, startups present a short introduction of their people. However, like other angel investors, I invest in the team, not just in an idea. In your presentation, speak honestly about your founding team and other team members. Identify your plans for future recruitments. Why is this team guaranteed to succeed? Pitch the team from different perspectives. Detail their skills, your own skills and your former employers. But more importantly, make sure to talk about why you are collectively involved in this project.

Talk about your shortcomings

In addition to focusing on the all the great aspects of your business and its future `hockey stick`, take some time to talk about its weaknesses too. Your team may be lacking certain skills or there may be challenges you are currently facing. Angel investors are interested in making money from your business, but they are also there to mentor you and provide help when needed. By talking about your shortcomings, you show that you can not only see your company from a bird’s eye view but also self-reflect – these two aspects are fundamental for success. By addressing your shortcomings from the start, you build trust with the investor, which is mandatory for a fruitful partnership.

Create a flexible roadmap

Most startups present one perfect path for how the company will take: starting with the present, it will move from one milestone to another over the next few years. I can promise you that the road will not be one straight path towards a unicorn or a juicy “exit”. It will take many turns and pit stops. Try to visualise and anticipate the various ways of getting there.

Ultimately, it is the same foundation as in sales. Using two ears and one mouth will lead you to either winning (getting an investment) or learning. Most angel investors are highly experienced in different kinds of challenging situations from their own businesses or careers, so you don’t need precise answers for everything. In the end, your team will find the answers. Your ability to be honest with yourself builds outside trust and a credible roadmap. To be a successful founder, it is most important to have the willingness and ability to learn quickly.

Author: Matias Mäenpää, Angel investor, serial entrepreneur, and co-Author of EXIT I & II

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