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I’m sure there are potentially hundreds of reasons why you haven’t closed your angel investors yet.

Now this is a blog and there is no way I can know who is going to come read this article right?

So – there are no cards up my sleeves, we didn’t meet each other previously and there are no obvious tricks here right?

Right…Good…glad we cleared that up….

So today, I’d like to try an experiment….

I’m going to propose three reasons why you have not closed your angel investors yet…

And here’s the deal – and this is where it starts to get really interesting…one of them is ABSOLUTLEY not the reason why you have NOT closed an angel investor yet…

…but I’m not going to tell you which one it is…you’ll have to figure it out.

That should make this experiment really easy right?

If one of the reasons is a fake then that only leaves two reasons why you haven’t closed your Angel Investors yet…

…(and just to give myself somewhat of an ‘out’ – elements of each reason may be accurate,other elements perhaps not so…well, hey, I’m the author, I can stack the deck any way I want!)

…and if there are only two big reasons why – if you know what those reasons are…then you are that much closer to addressing the reason right?

…right…

OK – Here are the Reasons – now…don’t forget ONE is absolutely not the reason and one of the other two is!

YOU have to determine which is which and by all means add your thoughts to the comments or send me an email with your thoughts…

Three Reasons Why You Haven’t Closed Your Angel Investor Yet:

Reason 1

The reason you haven’t closed your angel investors yet is not your fault.  Basically the economy stinks and the amount of cash out there to invest in new businesses has dried up. You, your business, your business plan, executive summary, elevator pitch, your sector, your positioning and your vision for what your business can be and your understanding of how to get there are all PERFECT!

It is absolutely not your fault – it’s the market and it’s because you haven’t met the right angel investor yet. As soon as you meet the RIGHT angel investor (even though the economy stinks!) you’ll close that right angel and be on your way to business success and fulfilling your dreams to create a world changing, heavily lucrative, personally rewarding company.

Right – that was Reason #1 by all means read it again to determine if that is one of the real reasons or the fake one. Remember – one reason will be fake, the other two possibly your reason /s.

Reason #2

The reason you haven’t closed your angel investors yet is absolutely and categorically your fault!

You are just plain not ready to have someone drop $500K…or $250K or even $2.50 and a semi eaten bagel on your business, for that matter.  You have the beginnings of a great idea – an idea which COULD become a great business – but you haven’t really jumped in and really owned the process making sure you absolutely understand your market, your opportunity, the competition, how you will deliver on the potential that your business has – you haven’t completely NAILED your business plan, your executive summary, your pitch deck, elevator pitch, your financials, you haven’t figured out how to creatively trial / test your business idea and you haven’t achieved many of the key milestones investors will evaluate you on as they go through the dating process. You have sort of determined your weaknesses – but you haven’t addressed them or completely determine a specific and tactical plan of action which will address them, like, yesterday.

Now – I could keep going but you get the gist…

So is this the real reason why you haven’t closed your angel investors yet (or is it the fake?!)

Reason #3:

The reason you haven’t closed your angel investors yet is absolutely and categorically your fault!

This reason is more around the ‘How to’.  Believe it or not, you can’t just throw out a few emails, make some calls, meet a few folks for coffees, have a couple of meetings, throw a Kinko’s bound business plan across the table and expect that after a few follow up conversations you’ll be watching the ink dry on a new check made out to CASH! It ain’t gonna happen – and if you think it will or thought it will then

“Don’t Quit Your Day Job!”

So picture this….

You go to a car lot – you talk with the car salesman – and he tells you how great the car is but here’s the weird thing….he doesn’t actually show you the car. He just asks you to imagine it, tell you how nice the speakers sound (without letting you listen of course..), he tells you how soft the naugahyde leather seats feel, he tells you how powerful the engine is and how fast it can accelerate from zero to 60 in first gear…

…but, he doesn’t actually show you the car. Not even to toot the horn!

Let me ask you a question….

How big a check would you write for that car?

Yeah – me too!

So again – what makes you think that with some fancy footwork (assuming you even HAVE a great business plan, executive summary, financials, pitch deck, elevator pitch, …yadda  yadda yadda…)

…that the investor will quickly see how great your business is and give you the cash you need?

Believe it or not – you have to know HOW to go through the investor funding process or at the very least, understand many of the dynamics, triggers and motivations involved.

++

Right folks…so which is the fake reason and which of the other two hit the nail on the head for you to some degree?

…and if today’s magic trick doesn’t hit the spot…

I challenge you to tell me why not…

…and if you’d like my help addressing any of the above – let me know through the contact page above.

Andrew

PS – Do you think I wrote this just because I was having a boring lunch? NO! I wrote it to help you. If you would like more help – join my mailing list (right column sign up) and my RSS feed (little orange icon…can’t miss it!)

PPS – take this survey and tell me what you need… http://www.surveymonkey.com/s/SVMFLJT

A

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I had a conversation today with a member of Eben Pagan’s team …

…for those entrepreneurs out there who don’t know Eben Pegan – he has helped entrepreneurs with various courses such as ‘Ignition’, ‘Guru Mastermind’ and others. Certainly worth checking out

….and look Ma, no affiliate links to Eban! I’m just glad to point you towards him – he can help…

So, for whatever reason, the conversation got me thinking about the very first time I went through the angel investor process and how, after quite a few months, I managed to close my first group of angels…

When I set out to raise money I was passionate about my business…you have to have that burning passion because it sees you through the lonely nights when no one loves your business or you…its the fuel that keeps you going even though you are inwardly cackling to yourself with insane laughter, giggling to yourself like a sleep deprived child (probably because you are very likely to be sleep deprived through self imposed highs, lows and Titanic sized pressure….)

…but here’s the strange thing….

…even though I was passionate about my business…even though I could see the world where my business would exist and where it would dominate the four corners (?) of the globe…a small part of me wondered if I would ever get the money we needed. Could I really get someone else to see the same world as me?

Who did I think I was? J. R. R. Tolkien?

The other interesting part of the equation that caused an extra few months of delay in closing my angels was the master / slave dynamic that I felt between me and the investor’s position and our negotiation…no, nothing kinky intended!

And do you know what too little sleep, too much Starbucks coffee (can anyone say free temporary office…), combined with never having been through the process before and feeling like the weakling in the relationship equated too?

…months of jumping through hoops…answer another set of increasingly obscure and inane questions for some who shall remain nameless…and having the process drawn out past the achievement of some key milestones which almost mitigated the need for the investment in the first place.

So here’s the conclusion I came too today after talking to one of Eben’s folks – here’s the two part answer that would have saved me months in the fund raising process and would have got my company growing much faster, much sooner….

Here’s the two part answer to “How to Close an Angel Investor” that would have saved me months:

How to Close an Angel Investor in two Simples Steps:

1) Find someone who had been through this process repeatedly and have them guide me

2) Ask for the Investment (or more accurately, know when you’ve answered enough questions and when its time for the angel to put up or shut up…and yes, I do mean that!)

Again…

Find someone that can help you through the process and LISTEN to them….

and ASK for the decision.

POINT BLANK.

No ifs, buts or maybe’s….what do they want ‘guarantees?

…and if the answer to that is ‘Yes – they’re asking for guarantees’ – tell those investors ‘types’ to go to Hell!

Case closed!

“But how will I know when to ask?”

Hold it a sec…perhaps you are asking yourself… “When will I know when its the right time to ask for the deal?”

This is how I predict the conversation is likely to happen…

…they’ll ask interested questions during your first presentation…they’ll sit forward, be engaged and will probably spend some time reviewing your documents before a second presentation.  All good right….

Then you’ll have your second meeting – they’ll come up with better questions and you’ll need to dance your way through them – assuming they’re still smiling, they will probably suggest a day or two to think before they talk or meet with you again…still good…

During the next chat or meeting – they will tell you they need more data or they need to see some progress in a particular area – perhaps achieiving an additional milestone.  The distinction between these two requests is HUGE!

Let me let you into a secret – if they are asking for more data then they’re still interested.  At this point, ask them – “Is this a full list of all the data you’ll need to make a decision?”

…and don’t panic – pushing for the close in a gentle way is a good thing. You’ll need to demonstrate that ability to move a deal forward otherwise you’ll not be able to get customers.  They’ll respect you for it as long as you don’t beat them over the head with your pushiness…

So, having asked that question…they’ll smile and if they assure you it is all they’ll need – go get that data…

If they ask you to make more progress, this means the investor has either decided to ‘pass’ i.e. not invest, or they want to further reduce their risk. This puts them in the ‘follow up later’ category. They are unlikely to invest so decide how many more cycles to spend before you focus your efforts elsewhere.  I would go find someone else in your shoes but that’s your call.  They will probably not become investors.

But before you walk out with your tail between your legs – here’s a piece of advice that could be worth the $500K you go ahead and raise…

Angels tend to invest in groups. Most entrepreneurs raise money by bringing a few angels together.  What does this mean to you?

It means the angel you are talking too probably knows other angels.

So – after this angel has either told you ‘No’ or “maybe later” – ask them for a referral.

A simple “Out of interest – are there other friends of yours that might be a good potential mentor or angel for us? We would really appreciate you helping connect us….”

Again – its all about not being afraid to ask…they will respect you for it. Promise!

…And here’s an example of asking…

I want to build a relationship with you…

Sign up to my list – get the free Venture Capital checklit on the right and join my RSS feed. AND add a comment.

See – wasn’t so hard…

Let me know if I can help you as you go through this process.  Assuming I have the bandwidth – I’d welcome the opportunity.

Best of luck

Andrew

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Angel Investors…Even the words make them sound like saviors who can swoop down and save you and your company from obscurity – beings who can lift you up by their wings and financial resources and make your business dreams come true.

But do you need to get down on your knees with palms pressed together to get yours?

In truth – luck (and prayer) might be a critical element – but being prepared and knowing what you’re doing are (like always) the most critical elements.

So, getting into it…where can you find your angel investor?

Here are…in no particular order…

5 Simple Strategies for Finding Your Own Angel Investors:

Simple Strategy 5 - Uncle Bob And Aunt Martha:

Believe it or not, crazy uncle Bob or Aunt Martha could be your angel in disguise – just because they’ve known you since you were a drooling on yourself, and just because they insisted on giving you socks for your birthday and remind you of breaking their window with your baseball at every family get-together, that does not mean that they have not got access to funds should they decide that you and your business are a worthwhile investment. Family and friends are surprisingly a popular means of raising angel funding.  

Angel Investor Tip #1: Despite the blood bond, take your ‘pitch’ to them seriously – invest in the same amount of time and work to prepare for the ‘meeting’ as if you were meeting an Angel from the best Angel network. Take them through your business plan in a professional manner, take their questions seriously and if they decide to move forward, formalize the agreement contractually. And send them monthly written updates just like you would any angel investor.

Simple Strategy 4 - Your Local Community:

Most angel investors invest within a reasonable driving distance of where they live.  Angels often invest because they like to be involved in the businesses – either because its in an industry they now well because of their own experience or because they believe they can add some value to the business above and beyond the funding.  This tendency means that most angels are likely to come from your community and are also likely to be successful people in your industry or one related to it.  

Angel Investor Strategy # 2 is to join your local business Chamber of Commerce – they often have events – networking is going to become your middle name as you look for an angel investor.  

Angel Investor Tip #3: Don’t go obviously looking for an angel investor – it will turn people off – instead go to the social events looking for a mentor – in fact, if you get on well with the folks at the events, ask proactively for any people are are ‘good mentors’ for local business people – this will lead you more quickly to an angel and a mentor than just going out looking for cold, hard cash.

Simple Strategy 3 -  Social Media and your Social Network

Your personal network is going to be a critical resource when looking for an angel investor. Sign up to linked in and Facebook and begin connecting your heart out with as many of your friends, old work colleagues, people from your affiliations (sports clubs, church, old schools, colleges and more).  Talk enthusiastically and passionately about your new or your growing business – passion and enthusiasm is contagious and people want to be a part of something with momentum and excitement -

Angel Investor Tip #4: Just like Uncle Bob mentioned above – don’t fall into the trap of thinking Angels all have grey hair and have passed the finishing line of their career – many angels in today’s business world are still using Proactiv having retired from a Google’sque type company at the grand old age of thirty. That guy you used to call ‘Nerd’ at High School could be the Angel you’ve been looking for…you better hope you were reasonably pleasant or it could be ‘payback time!’

[Talking of payback - take my 30 second survey and tell me what help you need...]

http://www.surveymonkey.com/s/SVMFLJT 

Simple Strategy 2 - Other Entrepreneurs:

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Hi Folks 

I spent the whole of last week on vacation and it was my first times doing absolutely nothing work related in more than ten years.  I am ashamed to admit that I even took my laptop on my Honeymoon…(and yes, my wife still mentions it ten years later…)

Well, not last week…last week the laptop was left gathering dust at home while I spent the week in Cape Cod, MA, sailing, sunning on the beach and by the pool and hanging out with my wife and young daughter. And do you know what was amazing?

Well, yes, the 90 degree heat, the crystal clear water and the fantastic meals were all amazing….but aside from those things… 

..the amazing thing was I got more real thinking done about my businesses and the evolution of my business model sitting by that pool and hanging out with my family than I would have done by turning up to the office every day. I guarantee it! And please don’t roll your eyes – that wasn’t the intention, it just…sort of…happened, as I had my eyes closed, listening to the sea wash back and forth up the sandy beach.

So last week felt like a vacation and it was – but it gave me the ability to step back from the trees and see the wood or to be more accurate, the multiple forests that surround me and what I do. Being an entrepreneur and involved in working with entrepreneurs is a gift – and it’s a vocation but I just realized that even the truly committed need some time off sometimes and when you do, that can be the best thing that has ever happened for your business, your health, your sanity and your family life.

So what does this mean to The Funding Guru site and what we do here?

Well, in short – I will be focusing on what people ask me to do more than anything and that is to help them prepare for fund raising.  If you are an entrepreneur then I’ll work with you on your positioning, your investor tools, your executive summary, business plan, financials, elevator pitch and so on – as well as guiding you through the hurdles and obstacles you’ll encounter. My goal is to get your great new or young business the money you need to create a world changing business.

I believe a big part of that process can be shown through a set of tools, courses and products too. I’m going to be working with my current group of entrepreneurs to create those tools throughout 2010. And if you are an entrepreneur looking for help – reach out and I’ll see if I have bandwidth. No promises but I may have some bandwidth to help. 

And in the meantime, even if you are the most passionate entrepreneur on the planet – why not take an afternoon off and do something completely different – and maybe you too will see the woods instead of the trees. And it could be the most productive afternoon you’ve had in years.

If you do take the afternoon off – come back and leave a comment or send me an email. I’d like to hear if taking a step back helped you too…

Andrew

PS – here’s a few quick questions so you can tell me how I can help you…should take 20 seconds MAX!

Click here to take survey

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If you are an entrepreneur or want to be, there are many things you can do to optimize the chance of your success.

But there is one thing you MUST do, no matter what business you are about to launch and this is especially important if you are already growing your young company.

This is perhaps the simplest yet the most powerful recommendation you may ever get for your new business and taking it onboard can mean the difference between success and failure.

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3. Are you this kind of person?

There is a lot to be learnt from the online marketers who are having great success in closing the sale with their prospects – some of those lessons can be leveraged by entrepreneurs who are looking to raise funds for their great young businesses.

If you are a new or young entrepreneur , one of the first useful tips is to find a Mentor.

Now before you blow this up into something huge and challenging – ideally a mentor will be someone from your chosen industry with a significant set of experiences that can be directly brought to bear on your start up….

…but, if you are new to an industry and do not have an obvious or reachable mentors (and don’t worry – after you’ve been doing your startup for a while, you’ll pick up one or two along the way…) but if they’re not jumping out of the woodwork today, first, consider looking for mentors in other industries that have skill sets you can leverage.

…and here’s another great option if you don’t have any obvious mentors hanging around….

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Here’s a quick poll….

Now I was going to set up a nice and easy to use poll and create links etc on this post…

But you know what, if you can’t add your choice as a comment or send me an email via the ‘Contact’ page, then you probably don’t care enough…

…and those people that don’t care enough…

I don’t really want their opinion…

…would you?

So here’s the poll…

Would you rather see articles on:
1) How to get angel investor funding?
2) How to get venture capital funding
3) How to find angel investors?
4) How to close an investor deal?
5) What are thetypical steps to engaging and closing an investor for your business?
6) Other (Please throw out a few suggestions and we may add them to the poll list)
7) So what is frustrating, bothering or worrying you about starting a business, growing a business or getting funding?

Just trying to get ‘into’ those areas that are really important to YOU!

YES, YOU! Not Me but You…so, over to YOU now…

Anything…go CRAZY!

Comment or send an email… (andrew (at) thefundingguru dot com)

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If you are looking for small business capital then it’s possible that the odds of you being successful have just been significantly harmed!

For some time, SEC regulations have outlined what is an ‘Accredited Investor.’ As an entrepreneur, your ability to raise money from Angel Investors is constrained to those people who overcome the hurdle of being an ‘Accredited Investor…

For some time, accredited investors, as it relates to Angel Investors were:

• a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;
• a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year

(Rule 501 of Regulation D – SEC regs)

So what does it mean to you if you’re an entrepreneur or if you’re about to start a business?

A few things…

…this is a body or organization somewhere which is deciding who are allowed or are not allowed to invest in your business…

You might have thought that anyone can invest in your business…perhaps your best friend, your aunt, the local Priest, but the reality is that there are long standing regulations which dictate who you are allowed to sell shares in your business too…

And here’s another kicker…it looks like the hurdles which determine who are or are not allowed to invest in small business have been increased.  Now it’s true that an amendment has been approved, but even so…

…here is one change to the regulations for example which could severely reduce the number of accredited investors…

Remember this provision from above…

“A natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;”

…previously that $1m of assets could include a person’s house…now, it cannot!

This one change alone means that the number of angel investors out there who are legal able to invest in young businesses has just been reduced…now the argument is that the regulations are being put in to protect the unwary or the downright stupid (I’m paraphrasing…) but who ever decided that having a certain number in a bank account was a good indicator of smarts or investor insight?

With the advent and growth of the structure of legal corporation’s decades and decades ago – where the liability of the investor is limited to the initial investment made – I wonder why we need the accredited investor regulations to be tightened and come to that…

Why we need them at all?

Andrew

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