Prepare for an angel or angel group by having the following ready:
• A 3 to 4 page (but no more than that) Executive Summary.
• A 10 to 20 page Pitch Deck power point presentation.
• Expect a lot of questions and be prepared to answer them.
• These guys are investing in you, so put them at ease with 6 to 12 character references!
• Names of potential and current customers.
• A Business Forecasting Tool and a Financial Model.
• How are you going to spend their money?
• The real economic levers in the business are?
• How do things look over the next 4 quarters?
• What are the hypotheses you are going to try testing?
If you have a Part Time CFO or an Interim CFO, they can help you figure out/put together the final 5 points.
Angels want to be secure in the knowledge that you fully thought through the project you are proposing financially. A financial model that addresses all possible contingencies and “what if” scenarios will help you prove this to them. Your financial model needs to show the angels when you will need cash and how much cash you will need. It also needs to show the angels the following:
• That you’re on top of the employee plan and the headcount.
• That you have a functioning Purchase and/or production plan.
• The costs related to your marketing and advertising plan are manageable.
• You know exactly where their investment is being spent and can show them/explain it to them very clearly.
• You are very comfortable with and highly knowledgeable of the metrics that will measure the businesses performance.
Every business/investment opportunity that angels look at, they realize will have a set of hypotheses presented by the entrepreneur because there are no certainties. Before presenting them to an angel or angel group, the entrepreneur should carefully consider each hypothesis and prepare them to the best of their ability. Ask yourself what economic levers will drive your solution to the market, and what economic levers dictate that your solution to the problem at hand is the right answer, and you can tell the angel what hypothesis or solution to a problem you are trying to test.
A solid list of angel investors can be found on the Angel Capital Association website.