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7 Signs You’re Fundraising Too Early

7 Signs You’re Fundraising Too Early | Angel Investors Funding |
Perhaps it’s the new ”American dream” of scaling like Zuckerberg or selling like Systrom, but every entrepreneur seems to think that if they’re going to make it big, they have to raise money asap.

The amount of money you raise has become associated with your perceived success, credibility, respect in the valley… as if you have to raise money to be legit.

As a result, way too many startups are raising money way too early.

I know this to be true, because I’ve been one of those people.

This past summer we spent about 3 months of our time trying to raise money. We weren’t successful. The truth is, it was too early to be fundraising. I know that in hindsight, but at the time I convinced myself otherwise.

We had taken $50,000 to join the 500 Startups accelerator which is built to help you fundraise and grow. After a couple pivots we still hadn’t figured out our product-market-team fit yet but figured if we could play the fundraising game right, we could still raise our round. Hell, we got into 500 because they liked our team, who’s to say we couldn’t get other investors on board?

That’s the story that’s told so often. You have to pitch 100 investors before one says yes, then the other investors you spoke with will want to get in as well. You have to create the perception that they’re going to miss out on a deal and that time is limited. If you know how to talk to investors with confidence and create the perception of demand, you’ll raise your round.

We bought into that idea…all in.

Continue reading... click on the title of the article.

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Why are you doing this? Why are you an entrepreneur? Watch this video!

Via Guillaume Decugis
Marc Kneepkens's insight:

Get ready first, the more ready you are, the easier money will follow.

This is a great article from a real entrepreneur. Great read, but don't just read, apply his conclusions to your fundraising.

Better even, take a look at the video 'Why are you doing this?' right above this window.

Guillaume Decugis's curator insight, December 13, 2013 2:17 AM

I'd say this is debatable as raising early can also give you a lot of options. Sometimes though you don't have that luxury and this post is worth reading for the signs it describes that your startup might not be VC-ready. If that's the case, hyper focusing in fundraising is a sure way to fail. Money can come from customers too...

Marc Kneepkens's curator insight, December 13, 2013 5:29 PM

If you are serious about succeeding with your Startup, including Fundraising, building a great company, and exiting that company when the time is right, take a look at this video. This is Startup School at its best!

Why are you doing this? Why are you an entrepreneur? Watch this video!

Lori Wilk's curator insight, December 15, 2013 11:50 AM

As we launch, we want to build on a structure and a solid foundation, most of us have lots to learn.

Angel Investors Funding
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For Start-Ups, How Many Angels Is Too Many? - NY Times

For Start-Ups, How Many Angels Is Too Many? - NY Times | Angel Investors Funding |
The Silicon Valley investment frenzy has spurred so-called angel investors into earlier financing rounds, but there are downsides for both entrepreneur and investor.

Shortly after presenting her start-up to potential investors at a conference, Nancy Hua was bombarded by eager suitors. A little more than 48 hours later, the Silicon Valley entrepreneur had amassed about $2 million from wealthy individuals known as angel investors.

The total number of angels that Ms. Hua raised money from: 21. And she could have gotten more if she had not cut them off.

“Thirty seconds into my pitch, three people emailed me saying they wanted to invest in my company,” Ms. Hua, 29, said of the experience raising money for her start-up, Apptimize, for which she announced the funding last year. “We had dozens of people whose money we turned down.” Read more, click image or title.

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Marc Kneepkens's insight:

Funding needs to be approached cautiously. Getting sudden attention from many investors could turn the wrong way if not managed well. Read this interesting NY Times article.

Javier Albuja's curator insight, July 7, 7:22 PM

El frenesí de inversión de Silicon Valley ha estimulado los llamados inversionistas ángeles en rondas de financiación anteriores, pero hay inconvenientes tanto para el empresario e inversor....

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Angel investor says he'll only invest in startups with women leaders

Angel investor says he'll only invest in startups with women leaders | Angel Investors Funding |
One angel investor wants an investment portfolio full of women.

One angel investor wants an investment portfolio full of women.

Jonathan Sposato, a Seattle-based entrepreneur and the CEO of photo editing software PicMonkey, made a bold announcement last week at the Seattle Angel Conference that he’d only fund companies with one or more female founders.

Women often have a more difficult time securing funding—numbers from CrunchBase show that companies with female founders only make up about 19% of seed and angel investments, and that number dwindles down as companies progress to each funding stage.

But the good news is the number of female founders are on the upswing. According to that CrunchBase data, the percentage of startups with at least one female founder rose from 9.5% in 2009 to 18% in 2014.

“Female entrepreneurs do have a harder time getting traction—whether that’s raising money, getting their concepts across, or even recruiting,” Sposato said in an interview with Mashable. “You can’t just take those issues and not do something about it. If you feel passionate about something, you have to be the catalyst.”

Sposato says part of the problem comes from investors’ tendency to pattern match, or support startups that resemble other successful companies they funded that got off the ground. And those successful companies are more often led by men.

“We need to pivot our brains to think differently about how we define what gets to a successful outcome,” he said.

Sposato has been vocal about his support of enhancing women in tech in the past, speaking at the Seattle Women’s Startup Weekend in 2012. And PicMonkey succeeded, in large part, because of its female users, who make up about 80% of its audience.

Read more: click on image or title.

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Marc Kneepkens's insight:

Angel investors like Sposato make statements to support women. Hopefully he will go ahead and follow through on this statement. I don't see any reasoning in the article as to why that would be a good idea. Women founders approach business differently. They are more focused on value and building relationships with their client base. Women need to point out such advantages in their funding attempts.

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10 Things Angel Investing Taught Me About How To Raise Money For A Startup

10 Things Angel Investing Taught Me About How To Raise Money For A Startup | Angel Investors Funding |
Prerna Gupta (co-founder of Khush) is on the other side of the investor pitches now -- and she has 10 pieces of advice you need to read.

After selling my startup, the first big “purchase” I made was an investment in another startup.

I loved the idea of angel investing; I wanted to give back to the community that supported me when my startup was little more than a crazy idea. I wanted to be involved with promising startups outside of my own space. And, of course, I wanted to make more money.

I’m still just a baby angel, with a lot left to learn. But what’s surprised me most about my foray into angel investing is how much it has taught me about being a better fundraiser.

Here are 10 things I’ve learned about fundraising after becoming an angel investor myself:  To read more, click on title or image.

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Via Angelsbootcamp
Marc Kneepkens's insight:

A different perspective: that of the angel investor herself. Interestingly, she was funded herself and turned angel investor afterwards, so you get both angles here. She comes up with a few different angles. If you're ready for funding, read this first.

Jean-Louis Muller's curator insight, May 4, 3:37 AM

Quelques conseils de base, à lire et à relire pour ceux qui souhaitent lever des fonds. C'est simple, concis, compréhensible ... bref comme une bonne présentation de votre projet !

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The Emergence Of Small Town Angel Investing - Forbes

The Emergence Of Small Town Angel Investing - Forbes | Angel Investors Funding |

Many have the impression that most angel investing happens in Silicon Valley, Boston and New York. I’m here to tell you that angel investing is thriving in many other places across the country.  Case in point: angels in so called “flyover states” without a tradition of venture capital or cities with populations of 100,000.  These locations are creative angel epicenters that are doing special things to be successful.

Over the years, I’ve met many highly successful angels and entrepreneurs from places that may surprise you – Whitefish, MT, College Station, TX and Greenville, SC, among others.  These angels are having a great run, with financial returns to covet and the rewarding feeling of helping to create companies that are meaningful in their communities and states.

Read more: click title or image.

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Growthink helped me with two business plans. I liked working with Anna Vitale because she was a professional yet personable and that gave me a sense of trust. Keep up the good work.”

Phil Marcu

Via Think Tank M&A
Marc Kneepkens's insight:

Angel investors are everywhere. They are accredited investors who are looking for good returns. They have lots to offer as well: experience, connections, good advice. Pick carefully, present well.

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Start-ups welcome a new wave of female angel investors -

Start-ups welcome a new wave of female angel investors - | Angel Investors Funding |

New research reveals that angel investors are increasing in number, with many of the individuals behind the rise being both female and younger than the current crop… You are reading an article fromtheWomen in business series, to read more about about this you can visit the series homepage.

If you’re a start-up operating in 2015, you will have more opportunity to receive angel investment than ever before. What’s more, there’s an increasing likelihood that your angel will be young and female, details a new report released by the Centre for Entrepreneurs and the UK Business Angels Association.

Women now represent one in seven angel investors, double the rate observed in 2008. Angels are also getting younger - three quarters of angels are aged under 55, with 44% under 45 and 16% under 35 years. In London and the South East the shift is more pronounced, with 46% of angels aged under 45 compared with 37% across the rest of the UK. The news will be warmly welcomed by many in the business community, with the longstanding problem of female entrepreneurs struggling to find investment looking to be tackled in a number of inventive ways as of late. Recognising that some women in business feel alienated by the macho culture and have certain doors closed to them, funding platforms such as Mums Mean Business have looked to provide an answer. To read more, click on title or image.

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Growthink really understands how to create compelling business plans and raise capital, and Growthink's Capital Raising Products succeed in infusing this knowledge.
-John Morris
Managing Director, GKM Ventures,
Board of Governors, Tech Coast Angels

Via Angelsbootcamp
Marc Kneepkens's insight:

Nice evolution in the Angel Investing world.

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10 tips to find the right angel investor for your startup

10 tips to find the right angel investor for your startup | Angel Investors Funding |
If you're past the bootstrapping stage for your startup but don't want to fully dive into the venture capital pool, finding an angel investor is a good option to raise money and get some guidance. Here's what to look for in an angel.

Angel investors are people who are there to help entrepreneurs bring their ideas to life. However, for startups getting an angel on board is a difficult process that requires a lot of hustle. Here are some fundraising tips to help you out with that:

1. Choose investors you want to work with: Getting an investor on board is a long­term commitment. Ask yourself if you would enjoy talking with that person on regular basis. If not, move on. The best investors are people you admire or respect for their business background or industry experience. Getting a wrong person on board can harm your company in the long term.

2. Avoid time wasters: For some reason there are many people who pretend to be angels. It's not unusual to meet "angels" who turn out to be consultants or people hoping to broker a deal for a fee or commission. In other cases you will meet real angels who just can't make a decision. Learn to identify posers and set limits on getting a commitment (e.g. if you don't get a commitment after 3 emails, move on.)

3. Choose ex­entrepreneurs or people who understand your industry: Best investors are people who have been there and done it themselves. As an entrepreneur you will get into many challenging situations and your investor should be there to help you. It's hard to understand what it's like to deal with challenges of a startup if you haven't done it before. Therefore, look for people who have that experience.

4. Get introduced: The best way to meet an investor is to get introduced by someone they know and respect. Leverage your network and look for intros on every occasion. It may be a networking event, a business meeting or even an intro from another angel who likes your idea but chooses to pass on the opportunity for some practical reason ­ they may know someone who is in better position to invest.

5. Cold emails work: If you don't have an extensive network cold emails are the second best way to approach angels. The best emails are short, to the point and contain some link, screenshot or a wireframe of a prototype.

6. Prepare your pitch: Before you get into meetings, prepare your full pitch. Best pitches are simple and easy to understand. Top investors don't care about ideas, they care about team and their ability to execute. Other important factors to include in your pitch are: size and growth of the market you're in, significance of customer problem you're going to solve (is it big and monetizable?) and demonstration of a sensible go­to market strategy.

7. Get references: Once you land a meeting and start to move forward, be sure to learn about the whole portfolio of the given investor. Ask for referrals and contact founders of startups that failed or are not publicly listed in investor's online profile.

8. Top angels co­invest with other angels: Don't expect to land a full deal with one person. Top angles like to diversify risk and co­invest with other experienced angels. Keep your pipeline full, talk to multiple people and ask for referrals. When you get commitments for certain % of the amount you're raising, be sure to mention it ­ social proof is a very convincing factor.

9. Leave your NDA at home: No serious investor will sign a non­disclosure / non­compete agreement. Firstly, these documents are barely enforceable anyway and secondly investors talk to many startups with different kinds of ideas. Just because they turn you down, it doesn't mean they won't invest in another team that comes with similar value proposition.

10. Convertible note: In recent years increasing number of deals are structured as convertible notes. Convertible note solves one of the main issues associated with closing a deal ­ valuation. This kind of deal allows you to save time and move valuation to another round of financing. Make sure you're aware of this option and learn about it before you get into talks with investors.

Raising money is hard and time­consuming process. The best funding however is your revenue, whatever you do make sure you're you stay focused on building a company and gaining traction. After all the most attractive deals to angels are the ones that don't need money at all.

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Marc Kneepkens's insight:

Angel investors are regular people wanting to invest in exciting companies with a good ROI. They may come with more than that though. Great article on how to find your match.

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What Angel Investors Are Actually Buying From Your Startup | Fast Company | Business + Innovation

What Angel Investors Are Actually Buying From Your Startup | Fast Company | Business + Innovation | Angel Investors Funding |

How many times have you heard startups are hard and companies fail? You know the drill. Think about it: If angel investors were actually buying your company, they would be much more interested in its outcome. But they aren’t.

Sure, angel investors are taking a small option to buy future shares at a discount price--particularly since the vast majority of funding rounds nowadays are made through a convertible note--but in their eyes that’s just a byproduct; a consequence.

From an angel investor standpoint, you’re now competing with hundreds--if not thousands--of other startups. Every single one of them are valued between $3 million and $6 million--and in more rare cases, up to $8 million. Every. Single. One.

Let that sink in for a second. It’s like when you go to the supermarket, and you are surrounded by 20 different brands of cornflakes all priced the same. How do you decide which one to buy? The angel investor is viewing you and your startup as that brand of cornflakes on the shelf. So how do they make a decision? They take the following four things into account:

  1. Product
  2. Team
  3. Market
  4. Traction

Angel investors ask themselves the following questions while talking to you about your startup:

  • Do I like the team?
  • Am I comfortable with the market?
  • Does your startup have meaningful traction compared with the other cornflakes beside them?

If you want to maximize your chances of finalizing a positive outcome--or in other words, having them write you a big fat check--you better have a good answer to all those questions. Any angel investor doing their homework can reach any startup through AngelList, and can also collect third-party data on you and your competitor via tools like Mattermark.

Startup Success Is Unpredictable

So this is how they make their purchase decision, but what are they actually buying from you? Not your company . . . but rather access to privileged information. Think about it for a second--that’s why investors don’t care if you fail, but get pissed off if you don’t share what’s happening. It’s fine to screw up, but it’s not okay to hide it. Does this ring a bell? Here’s why.

Regardless of what the average investor may tell you, the reality is no one can predict who or what will become successful. Companies pivot. Markets shift. Founders split up. In short: shit happens.

When the most exciting companies start fundraising, they usually become oversubscribed very fast.

Look at three startups everybody knows: Uber, Airbnb, and Color. Uber started with an AngelList round at $5 million, and now is the hottest company on the planet. Color started off as the hottest company on the planet and vanished, regardless of a monster round. Meanwhile, Airbnb originally offered cereal and air mattresses before nailing down the model that made them worth more than the Hyatt--without owning a single room or hotel.

Another element to understand is timing. When the most exciting companies start fundraising, they usually become oversubscribed very fast. Some other companies fundraise for a long time and collect interest until they find a lead on which everybody wants to pile on, but at that point it’s the company that decides who’s in and who’s out. The actual window for investors to act upon is pretty small, and when it does open they’re forced to make a decision very quickly. If they don’t know you beforehand, then it’s very unlikely they will have the time to collect all the data they’d like.

Don't Hide Screwups; Be Upfront

Even if investors have known you and your startup for a while, they still have an issue--it’s very hard to see how a company is performing from the outside. A majority of founders don’t disclose monthly key metrics and their performance in time--if not from a very high-level standpoint. It’s like peering through the keyhole. Sure, they get a glimpse of what’s going on, but they cannot picture the whole story. And that’s a huge issue, because having access to information before others means being able to put more money at lower valuations. That's a win.

What’s the best way to get early access to data so you can determine the difference between an Uber and a Color? Being an actual investor. Here's the downside: lots of early bets will fail. But the upside? They’ll get privileged access to information, and they’ll be able to know--instead of guessing--who is really outperforming the other companies they have information on, benchmarking you against the other ones. Why is this important? Well . . . because of math, and because the real action is what happens next.

Put yourself in the shoes of an angel investor who has 20 investments. If you invested at a $5 million average valuation and 15 of them will eventually fail, four of them will exit for an average of $20 million, and one of them will instead make a $250 million exit. That’s a ballpark figure of around a 4X exit in four cases, and a 50X in one case. It’s a 64X return on a 20X investment; not bad at all if you can get it, and should not be taken for granted.

Even if investors have known your startup for a while, it’s hard to see how a company is performing from the outside.

But here's where things get interesting. If you double down at the following round of a best performing company that has a $25 million valuation, then that's an additional 10X return on a single--and a much less risky--investment.

That means you’ll have the opportunity to get a 74X return total on a 21X investment, or a 94X return on a 23X investment . . . which is way more exciting. It’s called pro-rata rights if you’re doing a priced round with preferred shares, but any good founder will give the same opportunity to his early investors anyway, regardless of the financial vehicle used.

That’s why angel investors don’t care if you’re screwing things up and failing, as long as you’re upfront enough to share that information with them, enabling them to benchmark the other companies with you. Not only that--they’ll also be more than happy to help.

--Armando Biondi is cofounder and COO of AdEspresso, a SaaS solution for Facebook ads optimization. He lived in Italy until relocating to San Francisco in 2012. He previously cofounded Pick1 and four other non-tech companies. He’s also an angel investor in Mattermark and 10 more companies, is proudly part of the 500 Startups network, and is also a former radio speaker.

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Marc Kneepkens's insight:

Investor psychology. This is very revealing. Read to know what they want.

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10 Things Angel Investing Taught Me About How To Raise Money For A Startup

Prerna Gupta (co-founder of Khush) is on the other side of the investor pitches now -- and she has 10 pieces of advice you need to read.

After selling my startup, the first big “purchase” I made was an investment in another startup.

I loved the idea of angel investing; I wanted to give back to the community that supported me when my startup was little more than a crazy idea. I wanted to be involved with promising startups outside of my own space. And, of course, I wanted to make more money.

I’m still just a baby angel, with a lot left to learn. But what’s surprised me most about my foray into angel investing is how much it has taught me about being a better fundraiser.

Here are 10 things I’ve learned about fundraising after becoming an angel investor myself:

1. Tell a good story.

Storytelling is the most effective way to convince someone of something. A powerful narrative captures our attention, tugs at our heartstrings and makes us vulnerable.

Investors have to sit through a lot of boring meetings. Make it easy for them to pay attention.

2. Be crystal clear about what you’re selling.

It’s always surprising to me how many entrepreneurs are unable to clearly explain what they’re selling. If after reading through your pitch, watching your video, perusing your AngelList profile, and speaking with you for half an hour, I’m still unable to explain to my husband in two sentences what you do, I’m not going to invest.

If you can’t explain what you do in two sentences, how will I?

It doesn’t matter how complicated your technology is, or how obscure the problem is that you’re trying to solve. You must find a way to distill it into something an intelligent layperson can understand.

If you’re unable to do that, my assumption is you can’t explain your product to your customers either.

3. Make your presentation pretty.

Design matters. For the same reason good design matters for your product, it matters for your presentation. Investors are just as impressionable as your average consumer. Pretty slides send a signal that you know how to build a good product. (This may matter less in hardcore technology or enterprise startups, but it certainly doesn’t hurt.)

Good design alone won’t get me to write a check, but it will impress the hell out of me. I’m a sucker for pretty pictures, just like everyone else. Use that to your advantage.
4. Anticipate their questions.

As you’re developing your pitch, try to anticipate the questions that will arise on each slide. For major questions, address them head-on. For smaller questions, be prepared with a good comeback, supported by data.

5. Be crystal clear about your goals.

I want to feel confident that you’re going to put my money to good use. I don’t need to see detailed financials (in fact, I probably don’t want to), but I do want to have a sense of what my money will help you achieve.

The best presentations specifically lay out exactly what they plan to accomplish with the current round of funding. Be explicit with your goals, and it will instill confidence in the investor that you have a clear vision and will spend the money wisely (even though all good investors know that plans change).

6. Hook them in 10.

Angel investing is by and large a gut-driven activity. For every investment I’ve done, I made the decision to invest more or less instantaneously. I still listened to the pitch, asked a lot of questions, and (somewhat) rationally evaluated all the information before committing to invest. But, if I’m honest with myself, I can see that the decision was always made with my gut, and it was usually made before I had any details.

Recognize that investors make snap judgments, and do your best to hook them at the outset.

7. Project confidence.

This one is obvious, but it’s so important that I felt I had to include it. Confidence is everything. It’s a fine line, of course. Don’t be arrogant. Be respectful and personable and kind. But you have to believe in yourself and your startup. And you have to make me believe that you do. Investors sniff out doubt like hound dogs.

8. Find investors who just “get it.”

I’ve passed on a lot of investments that fit all the obvious criteria: they were playing in a market ripe for disruption, had a great team, savvy founder, innovative product, lots of other reputable investors, etc. But I still passed.

Why? Even though everything looked great on paper, I just personally wasn’t excited about what they were doing. It wasn’t something I wished I had thought of.

I know that many of the opportunities that I’ve passed on will go on to be very successful. And I’m fine with that. Because for me, angel investing is not primarily about making money — it’s about participating in startups that I find exciting.

I believe this is the primary motivation for most entrepreneurs-turned-angels.

Don’t waste your time pitching to angels who are not likely to just get it. Not because they’re idiots, but because, for a million and one reasons, it’s just not their thing.
9. Be honest.

This is probably one of the hardest things to do consistently, but it matters, a lot. I will never, ever write a check to someone I think has lied to me, even if it was just a little white lie.

I’m as guilty as the next entrepreneur for pretending to know a number when I don’t. It’s hard to be honest when you’re under pressure. But I have so much more respect for a founder that just ‘fesses up when her dirty laundry is uncovered (or better yet, reveals it herself) than one who tries to cover it up with an obvious lie.

It sets a bad tone for your relationship with your investors, and it also betrays your self-doubt. If you’re truly confident in your ability to succeed, you have no reason to lie.

10. Be gracious when someone says “no.”

I know how frustrating it can be to hear “no.” You’ll probably hear “no” more often than you’ll hear “yes” throughout your fundraising process. As tempting as it is to be a jerk to an investor that rejects you, you have a lot more to gain by being gracious. Because this is almost certainly not the last round of funding you’re going to raise, or the last startup you’re going to do.

Investors don’t like to say “no” any more than you like hearing it. It’s hard to let down an eager entrepreneur, especially if you’ve been in their position before. It’s the one thing about angel investing I truly hate. It sucks.

When a founder responds graciously, my esteem for that founder rises tenfold. It even makes me question my decision to pass. And it certainly makes me want to keep tabs on the startup for the next round.

Prerna Gupta is an author, futurist, investor and most recently, CPO/CMO at Smule, where she remains an advisor to the Board of Directors.

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Marc Kneepkens's insight:

Another excellent story to learn what investors want. This one has been on both sides of the table. Very interesting.

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12 Things to Know About Raising Money From Angel Investors

12 Things to Know About Raising Money From Angel Investors | Angel Investors Funding |

When you need funding, angel investors can seem like a godsend. However, raising money from angels isn’t as easy, or as simple, as it might seem.

To learn more, I asked 12 successful founders from Young Entrepreneur Council (YEC) the following question:

I’m thinking of raising money from angels. What is one thing I should know?

Their best answers are below:

1. You‘ll Face a Lot of Rejection

There are hundreds of reasons an angel will reject your pitch, and so many things need to happen simultaneously for somebody to say “yes.”

Don’t tie your happiness on that day to the positive or negative responses you get from potential investors, because even with the best idea in the world you’re going to be bummed after 95 percent of your meetings. All it takes is one “yes” to get the ball rolling. – Travis Steffen, MentorMojo

2. You Should Understand What They Want

Angel investors are typically looking for two things: They are excited about the team and believe that they are the ones who can do it, and they believe in the space and the larger vision for the product. Make sure you find angels who follow accepted angel investing methods.

There are many stories of companies giving away way too much equity/control for very little cash. – Arjun Arora, ReTargeter

3. You Should Be Prepared for Due Diligence Early

Poshly’s investors include prominent angel syndicates. We found that after successfully pitching, angels like to do thorough due diligence.

Preparing financial statements, financial projections, referrals and competitive assessments early will help you to make the due diligence process as seamless as possible, helping you to close the deal quickly with investors. – Doreen Bloch, Poshly Inc.

4. You Can and Should Ask for Their References

You should be doing as much due diligence on your angels as they are on you. All cash is not equal, and it’s important to ask for references and talk to other entrepreneurs who took money from that particular individual.

In particular, focus on finding and speaking with people whose companies failed or did not meet expectations — and ask how supportive (or not) the angel was. – Matt Mickiewicz, Hired

5. Angel Networks Aren’t That Scary

Angel networks align dozens of prospective investors to hear pitches from entrepreneurs. These can be tough – you’re pitching an audience!

We had success in our two Angel group pitches. We simply assumed that 80 percent of the room wasn’t interested, and focused on the 20 percent that was diligently listening. Wow that subset, and you’ll have a bigger pool of potential investors. – Aaron Schwartz, Modify Watches

6. You Need to Know Your Numbers

Know how much you‘re raising and at what valuation. Know why you need that specific amount and when you forecast the break-even point to occur.

Understand your revenue model inside and out and be able to poke holes in it yourself. It will make you more believable and trustworthy then if an investor did it during your pitch. – Logan Lenz, Endagon

7. You Should Seek Counsel, Not Dollars

When you take money from angels, it’s more important to consider whom you are taking money from than how much money you are raising. Most angel investors are previous business owners or entrepreneurs, too.

Select angels based on whose feedback you value most. Having passionate angels that are willing to give you counsel and make connections for you are what helps to drive your business forward. – Arian Radmand, CoachUp

8. Your Communication Is Key

Your investors are clients. Treat your fundraising efforts as a sales cycle. Each investor needs nurturing and follow-up, just like your sales leads. Diligent communication before, during and after are essential to build investor confidence.

We write monthly email updates to current and prospective investors about our progress, explaining where we’re getting traction and what we’ve got planned. – Abby Ross, ThinkCERCA

9. You Should Share Your Mission

People don’t buy what you do, they buy why you do it. Share the “why” part of your mission as much as the facts and figures. It goes beyond the pain point your solving. Share with them why you want to solve that pain point and what success really means to you.

Of course, validate everything with a sound plan and the facts to back it up. – Andrew Thomas, SkyBell Technologies, Inc.

10. You Should Focus on Their Industry Experience

Concentrate on connecting with angels that are very aware of the industry, sector or vertical your company or startup is focused in. They will be more likely invest in companies that fit the city or region you’re in or industry they have previously been successful in or have deep knowledge and experience in. – Jason Grill, JGrill Media | Sock 101 

11. You Need to Be Able to Connect Personally

They have money and experience – great! But does that mean that angel will be a good business partner? A lot of business comes down to interpersonal relations, and many entrepreneurs forget that signing a terms sheet is just the beginning of a relationship.

If it’s the right angel, you’re going to spend lots of time together, so make sure they pass the beer test. Can you really talk biz over a beer? – Matt Hunckler, Verge

12. Your Honesty Is Important

Be honest with the potential investor and honest with yourself. Don’t hide anything from those looking to give you money, thinking you’ll just improve or fix it later. This is grounds for at minimum a constant pit in your stomach and at maximum the loss of your business through litigation.

Also, be honest with what your company’s value is. Too many entrepreneurs over-value their companies. – Andrew Howlett, Rain

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Good advice from angel investors.

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How Smart Entrepreneurs Select VC / Angel Investors - Startup Professionals Musings

How Smart Entrepreneurs Select VC / Angel Investors - Startup Professionals Musings | Angel Investors Funding |

How Smart Entrepreneurs Select VC / Angel Investors

Too many entrepreneurs tell me they are looking for an investor, and can’t differentiate between venture capital (VC) investors versus accredited Angel investors. They argue that the color of the money is the same from either source. They fail to realize that the considerations are quite different for each, which can make or break their investment efforts, and ultimately their startup.

Let’s consider some basic definitions. Accredited Angel investors are non-professionals investing their own money, while venture capitalists are professionals who invest someone else’s money (usually from large institutions). The amounts from Angels start as low as $25K, while minimum venture capital amounts usually start in the $2M range.

That doesn’t mean you should always go for the big bucks first. In fact, the reality is quite the opposite. Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds. Of course, between these extremes is a large overlap of interest and potential.

More importantly, the focus on numbers tends to hide other more subjective issues that could be more important for any given startup. These considerations include the following:

  1. How much ownership and control are you willing to give up? VCs tend to demand more control of your spending and strategic decisions, with required board seats and lower valuations. Angels will likely agree to simpler term sheets, better valuations, and less restrictive terms on potential dilution, voting rights, exit options, and executive roles.

  2. How big is your startup opportunity? If your targeted business plan opportunity is not at least a billion dollars, most VCs won’t even be interested. Both Angel and VC investors are looking for solutions that scale easily (product versus service businesses), and both expect revenue growth that can reach the $20M mark by year five.

  3. How large is the financial return you project? VCs will be looking for a 10X return on their investment in 3 to 5 years, or 30% annual IRR (Internal Rate of Return). That may sound high, but they know that up to 9 out of 10 startups fare poorly, so they are looking for one big win. Angel investors wish for the same return, but may accept a 5X deal.

  4. How many investment rounds will be needed? Angel investors are usually constrained to making a single investment per startup, but very few entrepreneurs make it to cash-flow positive on a single round. VCs tend to protect their initial investment, and they have the resources to make several multi-million-dollar rounds as required.

  5. How experienced is your team? First-time entrepreneurs rarely catch VC interest, unless they have one or more people on their team who have a track record of startup success, in the same business domain. Angel investors often have emotional motivation to give-back, and assume their own expertise and involvement will assure success.

  6. How good are your connections in the investor community? Sending unsolicited business pitches to every Angel and VC investor you can find on the Internet is a waste of your time as well as theirs. You need a warm introduction for most VCs, to get their attention. For Angel investors, you only need to do some local networking to get interest.

  7. How much help do you expect and need? Both VCs and Angels can and will help you, but VCs are likely to be more “hands-on.” They tend to have partners focused on a given business area, with current insights, executive connections, and the ability to bring in new team members. If you are looking for money alone, Angels are the better alternative.

If your startup can’t yet relate for any of these considerations, then your alternative is that popular first tier of investors, called friends, family, and fools (FFF). With these, you are on your own in negotiating amounts, valuations, and roles. These are people who believe in you personally, without evidence of previous startup experience, no current traction, and lack of valuation.

In all cases, investors tend to invest in people, more than the idea, or even the stage of execution. They are looking for a win-win deal, with entrepreneurs that demonstrate a positive chemistry and open communication. The color of any investor’s money may look the same, but it won’t help you if the price you pay is higher than the value it brings.

Marty Zwilling

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What businesses should consider with equity crowdfunding

What businesses should consider with equity crowdfunding | Angel Investors Funding |

Crowdfunding websites raised more than $5 billion in 2013. That said, there are some complications with crowdfunding that businesses should consider.

When it comes to getting funding for your latest business venture, crowdfunding may seem like a no-brainer. Crowdfunding websites raised more than $5 billion in 2013, and to get a piece of that wealth, all you have to do is set up an online profile and watch the dollars roll, right? Not so fast. While crowdfunding can be a viable way for entrepreneurs to raise capital, it’s more complicated than many people realize, and it might not be right for every business.

Equity crowdfunding could help some entrepreneurs, but it comes with rules and costs, and it won’t be appropriate for every business. A few things to keep in mind:
To read the full article, click on the title or image.

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Marc Kneepkens's curator insight, July 13, 2014 7:46 AM

Equity crowdfunding is a whole different deal than 'rewards' or charity crowdfunding. The rules are tight and expensive. Take a look at this article, it summarizes the situation.

Kishor Kafle's curator insight, July 29, 2014 11:30 AM

dear sir

 I am the Broker legal representative of Fernando Valle Pons the Principal of the HOLDING project... please read below
 My name is Fernando Valle Pons, (Nando Pons) Spanish nationality with actual residence in Eastbourne, England. (Just moved from Guangzhou, China where I spent my last 10 years). During my entire professional life I have enjoyed the freedom to work "my way" and develop the business model needed for great success at any given time and the results have been outstanding overpass sing not only sales budget but expectations. Today after having lots of successes under my belt, I have a MEGA project and as always I have designed the business model in order that is easy for everybody to join and have a JOB and a BUSINESS and never look back. The project needs 100 million Euros funding. (Euros due that the $US Dollars has devaluation and I cannot be short of budget) The businesses will have a lot of income and will fold every month during first 3 years (producing over $6 billion US Dollars profits ) (For such reason, I may consider to take 50 million Euros funding... the difference, we will build our own Intelligent premises with few months delay upon generating income from shares sells) therefore I can take as a LOAN or as a JOINT VENTURE or as PARTNERSHIP with Investor/s. The project is: 1. An Offshore main Company as a HOLDING and owner of all other companies. 2. An Offshore BANK as a payments and collections solutions to our own ACR (Affiliates Clients Referrals) + High Yield investment programs (PPP's etc.) 3. An Import / Export TRADE company in China mainland as the supplier of daily consumable products working for small profit just to maintain infrastructure in China and with a strategy to repatriate all investment (intelligent premises, inventories etc.) out of China  mainland. 4. A total of 30 E-commerce online B2C companies that are sold to the ACR as their own investment (they agree according to the research and the Affiliate program and willing to invest) I become my own competitor before anyone tries to copy and paste my own business model (did the same in 1995/6 with great success 5. In a later stage a Private Club 6. An a Gaming Company. The only Gaming Company that does not use debit / credit cards therefore has NO CHARGES BACK (Only talented people can design such Gaming business with ZERO RISK).  The people who will run such MEGA project: CHESS88 team, ITWEB team, PID team, ADMIN two teams. As you can see, I have surrounded myself with people that pose talent attitudes like me. 1.             This HOLDING businesses is feasible due my (Nando) talents, skills, experience, contacts in the Chinese Government and because I have done a massive Market Research, conducted interviews, surveys, studied the unemploymentph     phenomena, l learned how to profit from the social networks like Facebook, LinkedIn etc. In the next 5 years I, Nando, want to accomplish:

ü         30 million people network in my businesses in the next 5 years

ü         $8 billion US Dollars profits in 3 years

ü         Ensure earnings of $2 Billion US Dollars per year every year and growing

A   And spend my wealth by building a FOUNDATION (NGO) and dedicate to Children's programs to provide Food, Shelter, Health, Scholarship, etc.

Any interested INVESTOR/S. please send me your funding proposal and PLEASE if your proposal includes any up front FEE or sort of EXPENSES before providing the funding, SAVE YOUR TIME. (Any Bond insurance or any other sort of legal expense once I have the funding).
Meanwhile I will send you a set of files as Summary and Business Strategic Plan therefore you get to know who the teams are, the ACR's and how the businesses provide MILLIONS OF JOBS AND WEALTH TO ALL ASSOCIATES. You will also find copy of my (Nando) Resume CV and a draft of PARTNER AGREEMENT with my best offering as PARTNER AHHHH! for the ones that ask how much SKIN I have in the project, the answer is very simple $5 million me and my CHESS88 team have spent in Market Research, Surveys, Contacts, (including politicians from local Government) and test all Teams that will join. Kind Regards Nando Pons, CEO & Consultantchess88@chess88.comSkype: tradebiz Guangzhou,
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Why Hong Kong's Entrepreneurial Reputation Is Growing

Why Hong Kong's Entrepreneurial Reputation Is Growing | Angel Investors Funding |

Hong Kong is quickly becoming an entrepreneurial hot-spot in Asia. The city, long known as destination for established businesses looking for a base from which to target other markets in China and South East Asia.

But changing international dynamics mean that many Chinese companies are now coming to Hong Kong before heading out into the wider world markets. This is creating a new domestic service market which is attracting and growing startups.

“Many mainland brands find that while they’re perfectly adequate in China, they don’t work overseas. This means that these companies are looking for other items – accounting, law, design, and digital marketing – that will help them develop strategies and brands that will work overseas,” says Simon Galpin, director-general of investment promotion at Invest Hong Kong (InvestHK). “They realise they need specialist help and that creates an opportunity for service providers.”

To read the full article, click on the title or image.

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Marc Kneepkens's insight:

The way we do business is changing. And no matter where you are in the world, there are hubs of startup activity.

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3 Angles for Understanding Angels

3 Angles for Understanding Angels | Angel Investors Funding |
Entrepreneurs seeking a heavenly relationship with their investors should know three things before pitching their business.

Not everyone trying to raise funds for a new venture succeeds in scoring a check from Oprah.

But Judith Griffin is a determined woman with high expectations. She founded Pathways to College, which is based in Teaneck, N.J., in 1994 to help minority high school students across the country receive extra preparation and encouragement via after-school programs so they could be ready for (and complete) college.  

For-profit entrepreneurs can glean three key truths from Griffin’s nonprofit experience when seeking funds from angel investors, individuals who invest their own money in a business venture. An angel investor invests directly in a business -- not through a venture capital fund.

To read the full article, click on the title or image.

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Via Didier Roggeri, ventureLAB
Michael Binzer's curator insight, June 5, 2014 8:35 AM

Tips to understand your investors

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New Rules Allow Early Adopters to Become Early Investors

New Rules Allow Early Adopters to Become Early Investors | Angel Investors Funding |
Were you one of the first to identify Uber as a game changer?  What about being one of the first to use Amazon or Google in the early days? If you had..

Were you one of the first to identify Uber as a game changer?  What about being one of the first to use Amazon or Google in the early days?

If you had invested in Uber (now valued at $40B) in 2011, you would currently be sitting on a 600x return. Unfortunately, unless you were already very wealthy, securities laws would have prevented you from being able to invest in the these companies.

Early adopters have historically been prevented from crossing the threshold from customer to investor. However, a fundamental shift in the relationship between consumers and companies has been set in motion by new SEC regulations set to go into effect on June 19th.

Most early adopters interested in supporting private companies have been limited to rewards-based crowdfunding. This type of crowdfunding has proven to be a poor substitute for true early stage investing. Rewards-based crowdfunding websites such as Kickstarter allow individuals to pre-order products or donate towards something that they want to exist in the world. These “backers” do not get shares or equity in the company. Although these backers take on significant risk, they do not get any significant upside.

The story of Oculus VR is apt. Nearly two years after its celebrated rewards-based crowdfunding raise, Oculus was acquired by Facebook for $2B. Oculus’ early Kickstarter backers felt angered and betrayed. Though they had a sense of ownership in the company, they reaped no benefits from the transaction. Meanwhile, the institutional and accredited investors who invested in Oculus after the Kickstarter campaign (and in large part because of the Kickstarter campaign) made a large amount of money in a short period of time. $300 in equity in Oculus at the time of the Kickstarter campaign would have been worth approximately $45,000, a 145x return.

Successful technology startups owe it to their early adopters to let them participate in the company’s financial success.  These are the people who realized the company’s potential before the public and provided the momentum to turn that potential into a reality. Read more: click on image or title.

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Early adopters are part of the success of a startup and should be rewarded for their input and commitment. This article digests the new opportunities.

Richard Platt's curator insight, June 21, 1:01 PM

Here are some of the key takeaways:

  • EMV cards are being rolled out with an embedded microchip for added security. The microchip carries out real-time risk assessments on a person’s card purchase activity based on the card user’s profile. The chip also generates dynamic cryptograms when the card is inserted into a payment terminal. Because these cryptograms change with every purchase, it makes it difficult for fraudsters to make counterfeit cards that can be used for in-store transactions.
  • To bolster security throughout the payments chain encryption of payments data is being widely implemented. Encryption degrades valuable data by using an algorithm to translate card numbers into new values. This makes it difficult for fraudsters to harvest the payments data for use in future transactions.
  • Point-to-point encryption is the most tightly defined form of payments encryption. In this scheme, sensitive payment data is encrypted from the point of capture at the payments terminal all the way through to the gateway or acquirer. This makes it much more difficult for fraudsters to harvest usable data from transactions in stores and online. 
  • Tokenization increases the security of transactions made online and in stores. Tokenization schemes assign a random value to payment data, making it effectively impossible for hackers to access the sensitive data from the token itself. Tokens are often “multiuse,” meaning merchants don’t have to force consumers to re-enter their payment details. Apple Pay uses an emerging form of tokenization. 
  • 3D Secure is an imperfect answer to user authentication online. One difficulty in fighting online fraud is that it is hard to tell whether the person using card data is actually the cardholder. 3D Secure adds a level of user authentication by requiring the customer to enter a passcode or biometric data in addition to payment data to complete a transaction online. Merchants who implement 3D Secure risk higher shopping-cart abandonment.
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Angel Investors Still Awaiting the Impact from Equity Crowdfunding | Xconomy

Angel Investors Still Awaiting the Impact from Equity Crowdfunding | Xconomy | Angel Investors Funding |

After reading that angels would be the No. 1 losers due to the explosive growth of crowdfunding, angels like me have been keeping a wary eye on equity crowdfunding. Some reports in the press have suggested that crowdfunding could actually replace angels as a capital source.

So far, the warnings have turned into a big yawn. But here are the concerns for angel investors, along with my perspective on the situation today:

Has crowdfunding negatively affected total angel investment in the United States?

The short answer is no. According to Jeff Sohl, director of the Center for Venture Research at the University of New Hampshire, total angel investment in the US has grown steadily since 2010 when the JOBS Act was passed, from $20 billion annually to an estimated $25 billion in 2014. Yet as crowdfunding grows, total angel investing might be undermined.

How much capital is flowing to entrepreneurs through online platforms in the United States? Read more: click on title or image.

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Great info. Loving your business plan template, makes writing a plan almost fun.

Craig Heppell
Nambour, Queensland

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#Crowdfunding has opened many doors to funding #entrepreneurs, but also to new categories such as #donation based #funding and #peer-to-peer lending. This article delves deeper into what the numbers are and how #angel investors are doing. Excellent research.

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Three Successful Exits In One Week -- How One Angel Did It - Forbes

Three Successful Exits In One Week -- How One Angel Did It - Forbes | Angel Investors Funding |

Can you imagine having three successful exits in a week?

It happened to Dušan Stojanovic and this is a story worth dissecting.  He is founder and director of True Global Ventures and was named EBAN’s European Angel of the Year 2013, in part because of those exits in 2012. What can angels learn from Stojanovic’s strategies? One fact is without controversy: he adheres religiously to a strict investing plan.

To Stojanovic, angel investing is a skill-based gamble. It involves lots of luck balanced with roll-up-your sleeves hard work. His methods are proven by the fact that he has a portfolio of 18 companies that includes seven exits since 2005, with the amazing three in one week! All other investments are in companies that have reached a break-even point and none has closed down.

Read more: click on the title or image.

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"Growthink is a full-service business, representing you through the whole process - very important value-added service. We've been very impressed with the professionalism and kindness that Growthink has shown us in the rather complicated world of commercial financing."

Debra Soto
Freeballer Surfwear

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These are the kinds of angel investors you need in your sector.

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Beyond Fun: The Vital Future Of Wearables

Beyond Fun: The Vital Future Of Wearables | Angel Investors Funding |
Tomorrow's wearables might not turn on your microwave or help you get out of a bad date. But they could save lives.

Remember life before high-speed Internet, or when having a smartphone was considered a luxury? Every few years, a new technology comes along, gains enough traction to become its own category, and has the potential to change how we live.

Enter wearables. Some expect wearable devices to repeat the growth pattern of smartphones. The category has increased its global market value by over 1,000% since 2012. More importantly, the amount is predicted to double over the next three years, reaching U.S. $12.6 billion and establishing wearables as the de facto product category for the connected world. But the prevailing wisdom among many purveyors of wearables that their products simply need to be cool—A ring that turns on your microwave! A necklace that triggers fake phone calls!—is plain wrong. The future of wearables is decidedly pragmatic. Wearables will care for the elderly, aid the disenfranchised, and maybe even help save lives. Read more: click image or title.

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Richard Platt's curator insight, February 27, 10:09 PM

A study by the McKinsey Global Research Institute suggests that a wearable approach to preventive care may be more cost-effective than existing solutions. Through continuous monitoring rather than periodic testing, physicians could reduce treatment costs by as much as 10% to 20%, saving billions of dollars in the care of congestive heart failure alone, the study said.

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How Do Business Angels Think About 'Team?' Unique Insights From Super Angel Jonathan Milner

How Do Business Angels Think About 'Team?' Unique Insights From Super Angel Jonathan Milner | Angel Investors Funding |

Jonathan Milner shares great insights to how a Business Angel really thinks about the entrepreneurial team.

Jonathan has built an impressive portfolio; he has invested over £11 million into 31 different companies, seen four successful exits (Horizon Discovery, Frontier Developments, Curidium and Phonetic Arts) which have covered the entire portfolio plus 60% return and Jonathan still has 24 companies still going including Oval Medical Technologies currently listed on SyndicateRoom . While Jonathan has also had three failures he says it is exactly because he has built his investment portfolio to expect both the successes and the inevitable failures that his returns so far have more than covered his entire angel investment portfolio.

Turning to Jonathan’s personal motivation, it is clear he is a passionate business angel. Jonathan says he became a business angel because “it’s fun”  and because he loves “the thrill of being part of a startup that can change the world.” As expected it is clear Jonathan also values ‘the team’ above all else – saying it is “without a doubt” the most important thing when deciding whether to invest. He explains the team is the driving force to success and that a top performing team will “figure out a way of making things work” expecting them to be able to “walk through walls to get it done.” So, has Jonathan’s faith in putting the team first helped lead him to such success? Talking to him further, it certainly looks like it.

We discussed one of Jonathan’s notable success stories, Horizon Discovery, a biotech company that provides tools and services to support research into personal medicine. Horizon Discovery recently shot to IPO fame by successfully listing on AIM in March of this year, securing £68.6 million.

Jonathan makes it clear that Horizon Discovery co-founder, Chris Torrance, was key to his decision to invest in the company. In fact, Jonathan is explicit that he invested because Chris was “very knowledgeable yet humble” and Jonathan had a “strong belief [Chris] could do it”. Jonathan was also impressed by Chris’ wider ambition and personal humility – Chris was willing to step down as CEO – making way for Darrin Disley, of whom Jonathan also greatly approved, to focus on growing the business commercially. As Darrin has successfully lead the company to IPO, these are decisions that, for all, hindsight appears to have validated.

Conversely, a bad team can be a company’s undoing. While Jonathan admits “ life is too short to invest in people you don’t enjoy working with, ” for a business angel the importance of getting the team right goes beyond working enjoyment to tangibly impacting success, too. So much so, when asked what his ‘recipe for disaster’ is, Jonathan replied from experience: that the times he lost money was when he “invested against [his] instincts about the team.” So, not only is a great team the key to success but a bad team could mark a path to ruin.

Jonathan is clearly passionate about young businesses beyond their commercial worth. For instance, when he talks about working with Horizon Discovery, it is clear Jonathan has a real relationship with both the founders and the company itself. He explains that the reason he became a Non-Executive Director for Horizon Discovery was so that he could “stick up for the executive team and founders”. As a business angel the ultimate goal is for the team and company to succeed and from there the financial returns will follow. Jonathan believes this is the converse to the aims of Venture Capitalists, who Jonathan laments are driven instead by money and their own returns, with the company and its founders’ success being irrelevant.

A piece of advice

If pitching isn’t intimidating enough, after reading this account any budding entrepreneur may be even more fearful about how they come across during a pitch, but Jonathan offers some words of comfort. First, he reassures that “any good business angel will see through the nervousness” but advises that a good tactic is to follow up with an angel after a business pitch, taking initiative to try and meet again in a less stressful setting. Jonathan is also certainly looking for team players – avoiding big egos and founders that are either unable or unwilling (for fear of usurpation) to attract top talent – so if you are putting the success of your company first, then you are laying solid foundations.

Gonçalo de Vasconcelos is the CEO of leading equity crowdfunding platform SyndicateRoom that gives its members access to the top deals Business Angels and leading VCs invest in.

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 "I like the style of presentation, the breadth of information given, and the myriad ways to apply the information. Great stuff ~ thanks so much!!"
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There you have it, again. When investing in a start up you invest in people. Find the right ones.

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10 tips for investing in tech startups // Dreamstake Blog

The European tech startup scene is definitely getting hot.  It’s been a long wait but London’s tech city is now producing world class startups and it’s tempting to jump right in as an investor. You may well be an investment professional working in the city. Maybe some of your friends have already made a killing by backing a startup on the way up. However, be careful, early stage tech investment is highly risky if you haven’t been involved before. Here are a few tips to minimize the risk and increase the return;

  1. Get a basic understanding - Don’t jump in until you have a basic understanding. Most tech startups follow a process that is laid out in The Lean Startup by Eric Ries.  This defines the stages that startups go through before scaling. As an angel investor you will often be investing in a team with a prototype (MVP). The idea will still be unproven. Once it has been tested in the market, VCs come in with larger sums to scale it up.
  2. Invest alongside more experienced investors - This is a great strategy. Look out for startups that have already attracted a smart investor. This can be someone who understands the technology or the market sector.
  3. Diversify – Risk can be diversified by investing across asset classes and by spreading your investment over a portfolio of startups. Investing £500K in one tech startup is highly risky. However, investing £50K each in 10 startups is safer. This is especially true, now that the SEIS tax break will mitigate some of the downside risk.
  4. Watch the trends - The startup world is driven by trends. Timing is everything. Mobile is big and ‘internet of things’ and hardware startups are emerging. It’s important to understand the underlying trends, whilst being careful of the hype.
  5. Beware of vanity metrics - Startups are often fueled by buzz. They need to attract users by making loads of noise over social media. However, many of the metrics they will quote in the pitch deck have little significance. There is little value in a million like on Facebook if this was bought through an expensive ad campaign and doesn’t translate to revenues.
  6. Network - Be where the startups hang out and talk to them. You learn a huge amount from founders.
  7. Mentor – If you have a lot of experience in a sector, such as banking, offer to mentor on a fintech accelerator. This is a great way to stay close to the action and learn the ropes.
  8. Specialise - You may want to gain deep knowledge of a particular type of tech startup. Fashion tech and fintech are both hot areas to invest in, where London has a natural advantage.
  9. Join a platform - Of course we mean!  This is our very own tech startup investment platform. It brings order to the startup scene with a rating algorithm, offers free investment workshops and provides a platform for co-investment.
  10. Enjoy - Most angels get involved for the buzz.  Tech startups are exciting. They disrupt conventional businesses and make a big impact. So remember that it has to be fun. Invest in teams that you like, doing things that excite you. Engage with them and offer support

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Marc Kneepkens's insight:

Investors know that a lot of risk is involved by investing in startups with seed funding. This set of tips is really great.

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How To Negotiate Successfully With Angel Investors

How To Negotiate Successfully With Angel Investors | Angel Investors Funding |

1. Understand the Nature of Angel Investment

Angel investing is particularly associated with Silicon Valley, but this practice is used all over the world. Angel investors are often already successful entrepreneurs, but they may be anyone with money to invest in a startup. In return for the funds that the investor provides, the angel gets a pre-specified share of the business, in effect owning a percentage of your company.


Most angel investors then sell this stake in the business in the future for a profit. However, if the business fails, they don’t get anything in return. Because of the high-risk nature of an angel investment, some investors prefer to take a highly hands on role within the company. They also will need to see proof of your startup’s growth prospects before beginning negotiation.


2. Nurture Existing Leads

Treat relationships with potential investors as you would those with any other business leads. If there are any individuals who have shown interest in your company, follow up with them at least once a month to update them on your progress. This way, they’ll feel that they won’t be jumping into an unknown investment.


3. Track Results From Day One

Angel investors are interested in measurable results. To attract attention, keep track of all of your data from the get-go. No matter how small your business may be, spend time recording leads, profit, and website traffic. This provides proof of the progress you’ve made from day one.


4. Look Beyond Money When Evaluating Investor Value

Naturally, angel investment is attractive to entrepreneurs in need of startup cash. However, it also provides the opportunity for other benefits. Many investors are experienced entrepreneurs who have already learned valuable lessons through trial and error. If they have a financial stake in your company, they will most certainly wish to impart their wisdom to ensure its success. Look at the experience and networking potential of an investor as well as his or her net worth.


5. Have a Two-Way Conversation

You will undoubtedly put a great deal of time into refining your pitch for investors, but don’t forget that you’ll be entering a business relationship that’s ideally mutually beneficial. Don’t be afraid to ask questions of the investor during your negotiations. Find out more information about the individual’s investment history, resources, industry experience, and expectations. Follow up with references from past beneficiaries and consider all points carefully.


An overbearing or shady investor can often be dealt with in the same way that you would deal with a difficult boss, but there’s more at stake in this case. It may be impossible to separate yourself from a difficult investor in the future, so take care to do your research before you enter into any contract.


6. Follow Up

Don’t give up if a worthy investor has passed on your offer at this time. Continue updating your records and refining your pitch. It may be that you’ll find more interested parties in the future, or perhaps you’ll get a second chance with your pitch. Finding and negotiating with angel investors isn’t easy, but when done successfully, it can become a mutually beneficial, (and hopefully very lucrative) relationship for both sides.

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Marc Kneepkens's insight:

It's all about building relationships. You'll work with an investor for a long time, chose well.

Marc Kneepkens's curator insight, April 7, 8:31 AM

It's not just a matter of contacting an investor. It's a process and being professional all the way will make the difference.

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Strategies To Get Funded From Angel Investors

Strategies To Get Funded From Angel Investors | Angel Investors Funding |
The biggest challenge for a new company is to attract funding. How do you attract angel investors?
 Strategies To Get Funded From Angel Investors

The biggest challenge for a new company is to attract funding. Most banks will not make business loans to a business that doesn’t have a long history of making money. Your friends and family may not want to loan you money without a guarantee of seeing that money back. If you own a startup company, could angel investing be for you? How do you attract angel investors?

1) Find Someone Who Believes in Your Idea

The first step toward a successful pitch is to find investors who believe in your idea. For example, you may want to find someone who is enthusiastic about space research if your company is going to design a space capsule or another product that will help humanity travel to other planets.

2) Make Your Pitch About The Idea

While you want to spend time talking about the product and what it can do, talk about the products fits in with your overall vision. For an angel investor, it is more important that you believe in your idea as well as your product. If you don’t come off as passionate about making the world a better place or adding value to people’s lives, you are less likely to get the funding that you want.

3) Know What Your Angel Investor Wants to Hear

It is extremely important to tailor your pitch to the individual investor. Find out what he or she needs to hear before you get your money. If you pitch each individual with a generic presentation, you risk coming off as disrespectful or not ready to run a sophisticated company.

4) Show That the Company Is Worth Investing In

A good way to show that your idea is a good one is to show examples of past or current demand. Using crowdfunding sites to find early investors and customers is a great way to prove that your idea is worth investing in. If you have a prototype of a product that has won an award in the past, that could be used to justify the validity of your product and your company. You should also take time to talk up those on your board or on your management team. Having the right people on board further proves the potential for your product to be successful.

5) Don’t Lose Sight of the Core Product

Pitching to angel investors can be time consuming. However, you never want to lose sight of the fact that your company won’t survive without a great product. Make sure that you spend as much time developing and refining your product as you do looking for money. In time, a great product will lead to a bevy of investors who want to do business with you.

Attracting angel investors can take a lot of time and effort. To make the most of those efforts, you need to know how to talk to an angel investor to convince that investor to make an investment. While it may be intimidating at first to make a pitch, you will quickly learn what to say and what investors want to hear before giving your business a large sum of money.

John Alejandro is a blogger for i3Labs. He enjoys offering advice to investors and startups on investing and different ways to get funding.

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More information on how to get funded by Angel Investors? Check out Growthinks Angelguide:

Marc Kneepkens's insight:

Angel Investors are people like you and me. They are wealthy individuals investing their own money in your business. They are looking for a good return on investment, but also the satisfaction of helping out an entrepreneur. 

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The 12 Luckiest Startups In Boston

The 12 Luckiest Startups In Boston | Angel Investors Funding |

A handful of aspiring entrepreneurs just got lucky in Boston.

Ah, the relentless cadence of Techstars. All over the world, every year, from London to Seattle, its waves of ambitious startups and inventors seem to rise and surge with the inevitably of the tides. Its entrepreneurs march in step through its bootcamps to the rhythm of the seasons.

It’s an exclusive club – only about 1% of startups that apply wind up making it into the program – and over 90% that complete its courses prove their powers by surviving. The payout is mouthwatering for young firms: $118,000 in seed funding, intensive mentorship, and access to a network of mentors and program alumni. The payment is a 7-10% chunk of equity in the company. After 90 days with Techstars, the organization claims, companies average over $2 million in follow-on investment

Techstars Boston just announced its fall roster of lucky teams, and a few of them don’t even call Beantown home. Several of the most recent class hail from overseas, namely Australia, Holland, Croatia, France, Russia, as well as the United States. This is the first go-round for new managing director Semyon Dukach , a successful and relentless entrepreneur and the focus of a recent FORBES profile, looking back on his time as an MIT math wiz, a blackjack card-counter, founder of multiple businesses and his evolution as angel investor.

Here’s a list of the startup teams that will be working their tails off along the Charles this fall, toiling to make their entrepreneurial dreams come true–be they world domination or a quick strategic sale.

Techstars Boston Fall 2014 class:

  • Codeanywhere is a cloud based code-editor, development, and collaboration platform.
  • CoolChip designs next-generation kinetic coolers for electronics enabling quieter, smaller and cooler product experiences.
  • EdTrips makes field trips easy and drives more visitors to educational destinations by consolidating the booking and payment of trips among multiple locations and services.
  • Fairwaves develops disruptive open-source mobile network equipment and software to bring cell phone service to the next billion people.
  • Headtalk’s platform enables a new kind of nonverbal communication with wearable devices.
  • Helloblock‘s  API simplifies accepting online payments through Bitcoin.
  • indico is building the world’s first IDE for machine learning.
  • ROCKI is creating the standard for listening to the music you love on the speakers you already have.
  • Spitfire Athlete is building a brand that stands for strength and badassery among women, starting with a fitness app.
  • Streamroot cuts bandwidth costs for online broadcasters with native peer-to-peer video streaming technology.
  • Splashscore’s influencer activation engine helps large consumer brands find and activate their most influential customers on social networks to drive more clicks, likes, leads, and sales.

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Marc Kneepkens's insight:

Good startups get more chances than ever.

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Ultra High-Net-Worth Angel Investors Require More Than ROI

Ultra High-Net-Worth Angel Investors Require More Than ROI | Angel Investors Funding |

Wikipedia defines an ultra high-net-worth individual as someone with more than $30 million of assets. As an entrepreneur out raising money from angel investors, it’s important to consider their motivations, especially if they’re in the ultra category.

Consider the case of the ultra high-net-worth angel that puts in $100,000 for 3% of the startup. The company does well, raises more money such that the 3% stake is diluted down to 1.5%, and eventually has a nice exit for $50 million (exits of that size are rare outside the Valley). That $100,000 was turned into $750,000, then taxes are taken out, and the investor is left with ~$600,000. Turning $100,000 into $600,000 over a five year period doesn’t move the needle for the ultra high-net-worth investor. It doesn’t change their lifestyle, doesn’t buy them a jet, etc. Add in the fact that they need to make 10-20 of these angel investments to get some that have nice wins and the net result is a return on investment that’s not worth it when adjusted for risk and lack of liquidity.

So why do they do it? Three main reasons come to mind:

  • Fun – Entrepreneurs are an enthusiastic group that want to change the world. It’s fun to hang out with crazy people that believe they can conquer anything.
  • Lottery Ticket – If one does pop and turn into the next Google or Facebook, the return will be material and life changing.
  • Give Back – The most common reason is that these investors want to help the next generation of entrepreneurs and give back by helping both financially and in a mentoring/advising capacity.

Entrepreneurs would do well to consider angel investor motivations, especially with ultra high-net-worth individuals, as even a good return on investment financially won’t do much for their personal balance sheet.

What else? What are some other thoughts on the ROI of angel investing for ultra high-net-worth individuals?

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Marc Kneepkens's insight:

I agree with this article, however, they first look at ROI, and then the other perks become a factor too.

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This Top Investor Reveals What He's Learned Over The Last 10 Years

This Top Investor Reveals What He's Learned Over The Last 10 Years | Angel Investors Funding |
"Beware of the quick pass."

Jeff Clavier, founder and managing partner at SoftTech VC, has closed a deal or two in the 10 years since he started the firm. 

He was named one of Forbes' most active angel investors last year, and SoftTech has backed success stories like Mint, Milo, and Eventbrite. SoftTech also just opened a San Francisco office and raised a $85 million investment fund.

Luckily for all of us, Clavier was willing to share his wisdom from the last decade at the Pre-Money Conference and let us republish his deck here. 

To read the full article, click on the title or image.

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Marc Kneepkens's insight:

How to grow from being an angel investor into a VC fund.

This is the real insider view. Lots to learn for startups.

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The Goliath Syndrome

The Goliath Syndrome | Angel Investors Funding |
Why big companies get slayed by startups

It’s a paradoxical yet persistant truth in Silicon Valley that innovation is almost exclusively a biproduct of small, scrappy startups, not large public corporations.

It may seem counterintuitive that disruption and headcount would have an opposite relationship. You would think that amassing an army of thousands of employees would give you more leverage in this digital Game of Thrones, but business parks across North America are strewn with the carcasses of megacorporations that have been killed off or irrevocably maimed because they thought the clock would never run out on them (Kodak, Blockbuster, AOL, Motorola, RIM, Sun, Sony).

To read the full article, click on the title or image.

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Marc Kneepkens's insight:

Startups are very dynamic and flexible. They don't have to deal with the bureaucracy of administrations, and it's their reason for being what they are. Good read. Great motivation to keep on doing what you're doing.

Nyamongo Onkware's curator insight, June 17, 2014 11:10 AM

seeking seed money for my start ups