4 Insider Tips on Funding Your Start Up With Angel Investors
As a serial Entrepreneur who started out at the age of 24, everyone told me to look to family & friends for start up funding. I was frustrated. Did they realize this was unrealistic? Truth is, family can’t always invest. Your parents have probably lost 60% of their retirement in the stock market anyhow (like mine). In fact, I started my businesses because I saw them loose so much money. I watched years worth of their hard work, scrimping and saving, just go down the drain.
I’m writing this article for those who are walking that path: you come from a middle class family who can’t dish out cash to fund your start up. Like I tell my Entrepreneur students, I’m not going to lie to you. It will be the greatest challenge of your life. But the rewards are vast. Here are my 4 easy steps to get Start Up Funding from Angel Investors.
1. Can Your Product Scale Big Time?
This has to be the number 1 most important factor. So many people skip this. They believe they have the right product. Maybe you do, but it may not be what angel investors want. Here are some important facts about your product:
- Your product should be either a disruptive product (a very unique idea that can scale very quickly), or a streamline product (not distinctive; however, is value added with lower prices).
- PositiontoStart.com has great free resources on product positioning when trying to fund your start up.
2. Build Partnerships & Strategic Alliances
Partners. I’m not talking about profit & loss partners. I’m talking about strategic alliances. They will help you get funded beyond belief. Build strong relationships with partners, and your angel investors will be coming to the negotiating table.
- Choose partners with complimenting services/products.
- You don’t have to have a finished product.
- How can the two companies benefit from one another? Think of this as “trading”. You’re sharing something with them, they’re sharing with you.
- Choose companies that are start ups. They’re young; they need you like you need them.
- HAVE THEM SIGN A LETTER OF INTENT. This means they intend to use your product and partner with you.
What this tells Angel Investors:
- You are a serious business leader. More importantly, you’re ACTING like a CEO; building relationships, managing, and growing the business without money.
- Partners are distribution channels to customers. This means you have customers. Technically, you will qualify for Venture Capital by doing this, but I personally prefer angel investors. They have the Entrepreneur spirit J.
Angel Investors love prototypes. This doesn’t mean you have to have 100 products produced, or even a completed product, just one will do! If you have a software or internet company, a sketchflow works well.
4. Source Angel Investors
If you’ve been following my steps, you’re now equipped with everything you need. You now have a product, and partners (hopefully some letters of intent as well). It’s time to look for those angel investors and fund your start up.
- Find local angel investors specific to your industry.
- Apply to pitch at local presentations to angel investors.
There are several ways to find them. Google search, Linked In, angelsoft.com, but please stay away from sites like funded.com. They’re a waste of money. For more information on getting funding for your startup, visit CashtoStart.com
Remember angel investors are simply serial Entrepreneurs. They live for the thrill of funding the start up business. Show your passion, and don’t give up!
Amanda Frazier is the CEO of Plan to Start, Inc. (a free resource guide to Entrepreneurs), the Founder of The Synergy Hub, Co-Owner of Echo Management, Inc., and a valued coach to Entrepreneurs worldwide. You can visit her website at: http://www.stepstostart.com