What an angel investor will be looking for in their next business investment

Many times the difference between getting money from an angel investor and getting passed over is in knowing what an angel investor is looking for. Angel investors will be looking for certain factors in the businesses that they choose to invest their money into. Savvy business owners will take the time to learn what those factors are and then make sure that their business reflects them. This will certainly increase the chances that your business will be the one that gains the financing that it needs.Here is what an angel investor will be looking for in their next business investment-

• Potential for growth-Your angel investor will want to know your business has the potential to give them the return that they are looking for. Keep in mind that the angel investor you are looking to attract will want to know that he or she can gain a higher return with your business then they could putting their money somewhere else. You will need to be able to show that you not only have a substantial market share but that it will continue to grow in the years to come.
• Experienced management-Experienced angel investors understand that what they are really investing in is the people who run the business rather then the product or service they make or sell. This makes it crucial that you are able to show your angel investor that you and any management in your business have the experience and expertise to make your business a success. Keep in mind that your management will need to be able to show that they have the needed skills to run the sales, marketing, human resources, business finances, and other functions of your business.
• Well written business plan-Many business owners have the mistaken idea that they don’t need a business plan. However, it is highly unlikely that any angel investor will consider putting money into your business without a well written business plan. Your business plan will need to be based on the appropriate amount of research as well. Vague guesswork will not impress your angel investor. Your business plan should be complete and include: financial projections, marketing plans, and marketing information. If you need help writing a business plan there are many resources that can help you to do this. There are many online sites that can help as well as consulting with your attorney and your financial professional.
• Readiness for financing-In order to secure financing from an angel investor your business will need to be ready to use the capital that you will obtain. You will need to be able to show how you will use the money and what it will do for your business. If you cannot show that you will use the money to expand your business, increase its potential, and provide the required return there is little chance that you will get the investment money from an angel investor.
• Exit strategy-You may be surprised to learn that despite having a need to be involved with the businesses that they invest in most angel investors will be looking for an exit strategy right from the beginning. You should be prepared that any angel investor will only be looking to invest with your business for up to about 8 years. That means that you will have to show that you will have the required rate of return in that time period in order to be able to get the financing that you are looking for. If your angel investor feels that your business won’t be able to do this you will most likely not get the investment money.