Business Angels Taking The Risk By Carolyn Clayton At Isnare.com Ezine Articles

When you’re building a new business, or looking to expand your old one, the first thing you’ll always need is money. Money doesn’t just grease the wheels of business, as the old adage goes – money is the wheels of business. Everything in business depends on it, and if you can’t get funding, your business plans will never even get out of the starting gate. So, what do you look for in an investor? Some investors, called venture capitalists, represent large bases of other investors and, as such, are spending their money on your project, much the way a stockbroker or investing firm works.

On the other hand, there also exists a kind of investor who invests his or her own money in starting companies. They’re taking a risk, and are often careful where they invest, but they do invest somewhere – and with the right sales pitch, that somewhere could be your company. These investors are called business angels, and work either singly or in pools of capital. They may invest now, while shares are cheap; wait a few years for your company to mature, and then sell to other stockbrokers or back to you, if you’ve made enough profit.

The problem, of course, is that business angels are investing their own capital. No one, as they say, is more careful than a man spending his own money – business angels will be very careful where and what they invest in, so you’ll have to have a bulletproof sales pitch, if you expect to succeed and get the funds you need. A key here is preparation. Before your first meeting with your investors, make sure you know everything there is to know about your company, your market, your target audience, and your locale – nothing impresses people more than a ready answer for every question and plenty of hard evidence.

Also, make sure you have a good, clear business plan. Know how many people will be on your payroll, what equipment you’ll need to buy, what office space you’ll be renting, and how all these expenses translate into profits at the end of the year. Without a clear idea of how you’re going to make money, investors will be reluctant at best. Know the means by which you’ll get your cash, and you’ll better be able to predict the results to others.

Prepare for questions before you go into the meeting. Think about what you might ask if you were in the investor’s position. Questions like “how much do you expect to make the first year,” and “how do you expect profits to rise over the next decade,” are to be expected, as well as other questions more tailored to your specific situation. Know your unique selling points – what makes you stand out from the crowd? Why should the investor choose to give money to you instead of the next guy or the next girl in line outside the investor’s office? Show them you’re unique, and you’ll de facto eliminate the competition.

Much of the way these meetings is entirely psychological. Make sure you yourself are confident in voice and posture. Know you can make money and you’ll be much more confident when you make that claim to an investor. A straight back and a strong voice do wonders and can often be even more effective than strong logical arguments for what you say.

Make sure you’re committed as well. If you haven’t invested as much of your own money as possible, investors will suspect you of scamming or of not trusting your own company. If you’re heavily invested in your company with both time and money, investors will be more likely to believe your commitment to its successful completion.

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