How to raise funding from angel investors

with Stan Williams, AngelsDen

Angel investors get hundreds of pitches each year, how do you stand out from the crowd?

“as much as they are investing in your business, they are also investing in you”

Stan Williams is the Business Development Manager at Angels Den. In his role at Angels Den, he’s one of those who has seen hundreds of pitches. Of these only a few get funded. In other words he knows a thing or two about how to raise angel investment. We invited Stan down to share his insight with our startups at one of our mentor mornings. Stan was also kind enough to share a few tips with us here, on the IncuBus blog:

What do angel investors look for in early stage startups?

What most startups overlook when they pitch to angel investors, is the real personal aspect to it. That’s why pitching events work so well; investors get to see who is behind the business. As much as they are investing in your business, they are also investing in you. You can have a great idea or a great business plan, but if you are not the right person to execute that idea, inspire the team or get the business through the hard times then there’s no point for them in investing. You, the founders, and the team are the most important thing for an investor & often the difference between investing in one startup vs another.

Angels obviously also want to see that this is a high grow scalable business. They are not looking to find businesses that necessarily just bumble along at the same pace for the next 3–5 years. They are looking for businesses that can grow rapidly; something they can potentially get return on their investment and exit within 5 years.

Part of investing in you is ensuring you know your stuff! You’ve got to know your financials: what your figures look like for the next 3 years and to be able to explain and justify that.

You have to work out which segment of the market you’re focusing on first and not that you’re not just going after a huge market.

Have a clear idea on how much you’re looking to raise and what you’re going to spend that money on as well. Lots of people come to us saying that they are looking for half a million or a million pounds, but actually their business only needs £2-300,000.

How can startups build up connections with investors?

At Angels Den usually what we try to do is match people together with someone who has got industry experience, knows the sector and can add real value going forward. So my first advice would be to have a look around your industry and your sector. Try to find out if there’s anyone who would be a dream person to come and be in your business; someone who has got good connections, already completely understands your market and could really open doors for you. If that person –the lead investor- comes on board, then it’s much easier to go out to other angel investors and raise on the back of that.

And of course networking! Attend many events where investors might be and start to build those relationships. Some of them might not be looking to invest now, but maybe when you’ll be further down on the road these contacts will be really valuable to you.

Are there any common mistakes that startups make while looking to raise investment?

A common mistake is that they just think about the investment aspect and purely the money. Well, it’s not just about the money but it’s also about having an angel who can bring direction, support, and connections. And actually in 2 years time when the business directions are off and you need some further funding it’s the angel investor who can come in and help you. If you just choose taking money from anywhere –e.g. a bank- they probably are not going to give you that level of support and added value going forward. Once you’ve got that right person on board you can go and accept the money from anywhere, but you’ve got to realise that raising investment is much more than just about the money.

Thank you Stan!

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Stan Williams interviewed by Evelin Torocsik