If you’re an entrepreneur, you’re familiar with the term “angel investor.” For the uninitiated, angel investors are investors that inject their own money into a small startup either as a one-time investment or as a continuous stream of funding. Technically speaking, according to Investopedia.com, an angel investor must have a net worth of at least $1 million and have an annual income of at least $200,000. Angel investors can be crucial to getting a startup off of the ground, which is why entrepreneurs are eager to please and attract them as often as possible. Since these investors can be so important, it’s important to know what to do and what not to do when speaking with them. Here are some tips and tricks on how to handle angel investors.
Check Your Attitude at the Door
You’ve probably seen a number of posters hanging on high school classroom doors with this saying; well it plays a major factor in the world of entrepreneurship. There’s a difference between being confident and charismatic and cocky beyond all belief. If you find yourself demonstrating the former attributes, then you’re in a good position; but if you think you’re bigger and better than everybody in the room, you’re likely not going to land a deal. There seems to be an incorrect idea that angel investors want to work with entrepreneurs who are sharks. This isn’t always that case. You catch more flies with honey than with vinegar. Be nice to your angel investors.
Understand and Respect the Mutual Relationship
When it comes to entrepreneurship and investing, no player is more important than the other. Angel investors need entrepreneurs and vice versa. This stems back to controlling your confidence. Just because you feel like you have the next great idea or company on your hands doesn’t mean that you’re more important than your investors. You still need to get that idea/company out of the startup phase. Show your appreciation to your investor by being kind and respectful.
Don’t Just Focus on the Product
As an entrepreneur, it’s very easy to get caught up in your latest and greatest idea. You have a product of a business idea that you know would be phenomenal for society. You have all of the information you need for the product itself; how to create it, what it will do and why people will want it, but you forgot about the most important aspect: how is it going to make money? While it may be a rather blunt and tactless question, at the end of the day, investors are looking to make money. They are giving their own money to, hopefully, make money from your idea. If you are going to ask them for money, you need to give them a solid idea as to how you plan to make money, also known as a business plan. Getting the information in order for the product is important, but you need to have a plan ready for how you intend to create a sustainable business. Otherwise, you’re simply offering investors an unstable product, and they will likely not invest.