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Things to consider when meeting with an angel investor

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When you are going to be meeting with a prospective angel investor, you need to take into consideration certain factors. Knowing and understanding these factors will help you in making a plan, to secure this angel investor. If you are a business owner, looking for funding, here are some things to consider when meeting with an angel investor-

  • What is the state of your relationship with the angel investor? It is important to keep in mind, that the right time to ask for money is when your relationship is comfortable and trusting, and when you sense the investor will be open to the request. If your potential angel investor is a friend or family member, you should have a good sense of their personal life. If the investor is unrelated, you'll be best served to make contact, and have at least two or three social interactions, with him or her, before asking for money. The exception to this is if you're lucky enough to have a strong introduction from a close friend of the investor (preferably one who's already invested in your business), that is specifically intended to help you schedule a meeting to ask for money. The bottom line is that in each case, the potential investor should know you have a business plan, and be curious to hear more, before you suggest a meeting about capital-raising.
  • What are the cash needs of your business? There are many online tools that can be used for estimating your company's cash.It is also advisable to talk to your accountant or other financial professional, before approaching investors. You will need to have a very clear idea of the amount of money you want to raise.It is important to understand that it will take, at a minimum, many months to close on your round of fundraising. Because of this you'll need to understand your cash flow, well enough to plan several months in advance, for how much you'll need and when.
  • How much time do I need to raise the money? You should keep in mind that it takes time to raise money from relatives, friends and angel investors. Studies show that entrepreneurs should expect it to take six to 12 months, to close a round of venture capital. For raising money from relatives, friends and angel investors, it could take as little as three months, to close a round from five to six investors. For raising a larger round from 10 to 15 investors, it could easily take well over 6 months. Remember that takes this amount of time because you're not just trying to raise money for your business, you're also trying to run your company. In addition, the investors have other things going on as well. The basics of raising funding such as: scheduling meetings, communicating, coordinating schedules, drafting documents, all take time. The bottom line is that imposing deadlines on angel investors is notoriously difficult.
Once you get that meeting scheduled with your angel investor, you want to have a plan that will do the following-
  • Clearly communicate your business idea-It is especially important to be able to show the cash flow projections of your business plan.
  • Be able to show what it takes to get to profitability-Remember that potential investors will want to see that you've "crunched the numbers" and made a plan for success.
  • Show what skills you're lacking, and which types of people and skill sets, you'll need to have. You will want to show your investor that you know this, and have a plan in place, to bring on board the people needed to make your business a success.
  • Be able to show your personal finances relate to those of the business. Investors will want to know you're willing to sacrifice to make the business succeed.
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