Is raising funds for your new or growing business tougher than you thought it would be? Are you wondering what it will take to get an Angel to say “Yes!”

Well in this article I’m going to give you two things – one is a powerful angel investor suggestion which will help you (even though I don’t know about your specific business…magic huh?) and then I’m going to offer you something for free that could help you. How do I know? Because I’ve tried to spin my way to funding and I learned from the experience, so knowing this suggestion will help make sure you don’t fall into this trap.

Before we get into it – I’d like to stress one point – if you read this all the way to the end and then take action, you will be much better off than you were just ten minutes ago…but if you don’t then you will be no better off and perhaps you’ll end this day not making the progress you want to achieve and without positive action, why will tomorrow be any different too?

So read this very brief article, take a specific action and you’ll be make a move closer to getting the funding you need for your business – and we both know that more funding for your business will mean more growth, more success and a future that today you can only envision. Sorry to get all ‘Tony Robbins’ on you but I woke up today wanting to make more of a difference to you and your business and the best way I know how is to make sure you take action – and I want to help you do it…

So first the suggestion…and then I’ll get to the free offer…

Here’s Secret #1 – Angel Investors have SUPER powers…

Now they can’t leap tall buildings or see through clothing but the majority of them have a common super power which, when you know about it, will help you find and close your angel investor FASTER than you thought possible.

So what is that super power?

Angel Investors have invisible psychic tentacles which wave around their bodies.

You don’t believe me do you?

Well its true.  And these invisible psychic tentacles capture and filter every communication you make – from the words to the body language, to the presentations, phone calls and emails and do you know what they are filter for?

In short – bullshit, fudging, spin, exaggeration, guesses, gloss and hyperbole…

Now you don’t realize it yet (but you will after a few months of banging your head against a wall while you DON’T get funding…) but I have given you one of the golden keys to the Angel Funding Kingdom – and collecting and using these keys means you can pretty much raise what you want, when you want and take any business idea and make it real.

Again – Angels really do have these psychic tentacles and if they touch bullshit, spin, exaggeration and the rest then any trust you’ve created will likely disappear.

So what do you do about it? How do you neutralize these psychic tentacles?

The answer is “You don’t!”

If you learn how to raise angel funding and get your angels and your funding then you will WANT there to be absolute and complete honesty and disclosure BEFORE you sign any of the contracts and get that cash. Believe me – if you are ‘spinning’ your way into the cash and then they find out you’ve been secretly exaggerating your way into funding then your life will be a living hell.

So does that mean that you tell them absolutely everything, warts and all, from day one?

Day 1 should focus on the big idea…the story behind your business…the why you matter and how you will change the world. The first meeting is NOT for airing all your weaknesses.

But the reality is – angels expect weaknesses – they’re WHY you need they money? They know that.

Don’t try to hide it from them- your goal is NOT to look perfect…

Your goal is not to look like a $1m business when you are worth $50K – your goal is to create an open and honest working relationship with angel investors who can give you the money you need.

In fact, if you bring out your weaknesses – point to then – and start talking them through how you are thinking of addressing them – you will get a few amazing results – it could even get you the funding you need.

If you and they start to brainstorm what your business needs to be successful – this is magical – because the Angel is imagining how to make your business better….and here’s the really powerful element…by giving you their ideas, they are mentally investing their will and desire to making your business successful – you are making them WANT to see you business succeed because you are following their advice – when you succeed, they succeed. And this is about ego and self image – not just about making a financial return.

So get them focusing with you on what it will take to address your companies weaknesses and you HAVE them…

And here’s the alternative – if you show them your weaknesses and they couldn’t care less and don’t have any suggestions, ideas or contacts for you -THEN YOU DON’T WANT THEM AS AN ANGEL INVESTOR. Kick them to touch, go focus on angels delivering real value above and beyond the money.

I mentioned at the beginning of this article that I would share some critical information with you and give you a free offer. What you have just read really does have the power to save you months of running around trying to lock in funding and get you not only the cash your business needs to be successful but identify the RIGHT angels who will work with you, as partners, to make your business something to be proud of.

And the free offer is the action you need to take right now to progress the funding you need.

I have just had some slot come available and will offer the first ten people who respond 20 minutes of free consultation about your funding over the next two weeks. If you would like a free 20 minute consultation about your startup there are some rules.

1) If you schedule a call and need to cancel you need to give me at least 24 hours notice. If you don’t cancel 24 hours or more before then I will not work with you in the future.

2) You need to come to that 20 minute call with the ability to communicate what your business or concept is and with 5 questions already thought through and prepared. Ideally you will email them to me 24 hours before our call. The why of this is so I can really give you value when we talk.

So if you would like a free 20 minute consultation about your funding – contact me through the ‘Contact’ page right now.

Make progress on your funding now and contact me for a free 20 minute consultation.

If you are one of the lucky first ten people then we’ll be talking soon.

Best of luck in your business.

Andrew

Related posts:

1. How do I find an Angel Investor?
2. How to Close an Angel Investor
3. Three Reasons Why You Haven’t Closed Your Angel Investor Yet

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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Six Key Motivations for Angel Investors #2

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1. What Are Angel Investors Looking For? Six Key Motivations of Angel Investors (#4)
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Key Motivations for Angel Investors

I was recently asked “What are angel investors looking for?”

My knee jerk response was “a significant return on their investment…”

…and like most knee jerks responses, I was both right and wrong at the same time and (and this is probably where the phrase comes from…) I was a bit of a jerk for not thinking it through better…

Yes – when an angel invests in a business they are likely looking for a significant return on their investment but that return is isn’t necessarily just measured in dimes, cents, dollars or whichever currency they happen to be dealing in.

So with a good cup of coffee I sat down to think through and home in on what ‘Returns’ an angel investors might be looking for when they make an investment – in other words, ‘What are the key motivations for angel investors?”

Now before I launch in – consider that angels are people and will be motivated by multiple reasons and what motivates them today, may not be what motivates them tomorrow. But I would suggest that there are primary and secondary motivations and by understanding them as an entrepreneur – you are ahead of the game….and by ahead of the game, I mean you are more likely to be able to lock in an angel investor and keep them in your corner if you identify and consider their key motivations. Look for the verbal and body language clues and once you’ve figured them out, keep them in the back of your mind because these are the engines which are potentially driving your angel today and during your ongoing relationship…

This week I thought I would examine what I’m calling ‘the Six Key Motivations of Angel Investors’

The Six Key Motivations of Angel Investors:

Motivation #1: A Financial Return
Angels back entrepreneurs and young businesses – a key motivation for doing so is to see that investment increase in value to the point where, at some stage in the future, they can gain the benefit of that increased value through some form of return.

Angel investors who are driven by the financial return ‘win’ when they invest in a business which goes on to increase in value by a significant multiple and when they can withdraw that financial return through some for of liquidity event – a term meaning some form of occurrence which makes the investment they acquired transferable into cash. These occurrences usually take the form of the company being acquired or being able to offer its shares through a public market of some kind.

Example – you invest in company A and get 1 of 10 shares for $1 (keeping it simple). If that company is then purchased and the company purchasing pays $5 for those shares – that purchase is the ‘liquidity event’ which allows the angel to sell their 1 share and gain the $5 offered for their share.

Some angel investors are focused on making a significant financial return – perhaps they are using these funds as a way of increasing their retirement income – angels who invest early enough can purchase a piece of a company at a reasonable price – but the earlier in the company’s life – the less visible the company’s future and therefore the higher the risk.

If we could all place a bet on a horse just before its about to cross the finishing line then we’d all make money gambling – the challenge is to make a winning bet before the race begins or when its in the first few seconds. The better an angel is at picking those winners early – the more likely they are that they will make mega returns on their investments – we call them investments but really the angel is gambling just like on a race. If you are the entrepreneur, you are the horse and the reason why you get asked some many questions during the due diligence stage is because the angel is checking out your pedigree and looking at your metaphorical teeth. Enjoy!

There are a few important facets to the financial return that investors are looking for – in the above over simplified example an angel buys 1 share and eventually gets to sell it for a multiple of the initial investment because there is an event (in this case a purchase) which allows them to transfer that share of ownership into cash. In many cases companies go through more than one round of fund raising – most go through multiple rounds. A round is just one way of saying ‘times’. So an entrepreneur sells 20% of the stock in their company round 1. During the next round (round 2) they create more shares and sell some more shares – during the second round the first group of investors often get asked if they also want to buy shares in the second round. Why is this important?

Because by selling more shares in the second round, the ownership percentage of the initial investors goes down unless they buy more shares equal to their original percentage in the second round.

Example: angel investors focused on a financial return consider two factors above all else: how much money they’re putting in, and the valuation of the company. The valuation of the company (i.e. how much it is valued to be worth) determines how much stock you give the angel. If an angel puts in $100,000 into a company at a pre-money (i.e. before the money is put in) valuation of $1 million, then the post-money valuation is $1.1 million (i.e. the pre-money valuation + the value of the investment…get it?), and the angel gets .1/1.10, or 9.1% of the company’s stock.

If your company raises a second round, the company will be divided among a larger number of investors which reduces their overall percentage (because you are dividing a slightly bigger cake among more people). If in the next round they sell 10% of the company to a new investor, your 9.1% will be reduced.

So if an angel is motivated by the financial return above all else – this dilution of their ownership stake will be important for them. You may find your initial investors being particularly active during the negotiations of company valuation in subsequent rounds. Interestingly, the motivations of founders are often aligned with the angels – they aren’t took keen on their ownership percentage being diluted either.

So if they are focused on financial return why will they allow their percentage to be reduced?

Because its being diluted by adding more cash to the company – the new shareholders brings in new cash, new contacts, new experience and increase the company’s potential for success. The early angels will often work with the founders to consider the new investors in terms of the whole package – i.e. all they can bring to increase the company’s trajectory and likelihood of success.

When talking with a potential angel consider the questions they are asking you and use that as a guide to what is this angel motivation for investing. If financial return is their key motivation – you’ll know what elements will drive their interaction with you both during the negotiations before they invest and their interactions with you after they invest. Investors who’s key motivation is delivering a significant financial return will emphasis valuation, dilution and achieving milestones towards a defined and reachable liquidity event. Angels are usually motivated by more than one of the key angel investor motivations – but understanding their key driver is critical both before and after they become your angel investor. By understanding this – you can align their interests and yours and negotiate the best deal for you, your business and your investors. Finding an angel predominantly motivated by financial return is neither a positive or a negative – but by identifying that financial return is a key motivator is critical so you know what information to emphasis during and after the negotiation. A good rule of thumb with ALL investors is communicate clearly and honestly about your business (even the problems and challenges – actually especially the problems and the challenges….), now you understand their primary motivation, keep that in mind during all interactions and focus on driving your business forward making sure you achieve the milestones you set and agreed with the angel when you established your relationship.

If you do that then their need for certainty and predictability will be fulfilled and you will be more likely to have happy investors who will back you today and with luck, with all your ventures in the future.

Questions on the first key motivation for Angel Investors?  Reach out via the contact page above and join my mailing list by adding your name and email in the box to the right. I’ll also send you some valuable downloads to help…

Andrew

PS:  and here’s an interesting video with some good perspectives so you can start getting into the heads of the better angels…

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If you would like your chance to be 1 of the 10 – leave your comment now!

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You’re treading through the entrepreneurial forest surrounded by uncertainty and mist – taking one careful step at a time, frightened to pick and commit to one path, you wonder if there is still time to turn around and head back into safer country – they’ve kept your old job available (..surely…) but, only pausing for a moment, you know, deep down, that you are already committed. Gulp!

…the hunt it on.

Your gun is lowered but your sweaty hands clasp and unclasp around stock and barrel.

You feel the weapon, knowing it has some weight – knowing too that it’s not as big or as powerful as those guns possessed by others but nevertheless, you’re still proud – it makes you smile because you created it with your own two hands.

You press on, only briefly glancing back over your shoulder, the path you’ve trod already dark and uninviting.

Your gun gleams in a flash of sunlight and inspiration…is it time to ready it? Should you relax for a bit longer? Will it be good enough to bring down your first investor?

Barely daring to breath – you swallow with a drying mouth – knowing your ability to eat rests on the next few moments, scanning for investor movement, then…

– SNAP –

…your last step breaks a twig underfoot…and the angels burst from the brush…

Your heart responds by jumping into your throat – damn! So Soon….too soon?

They scatter in multiple directions – none towards you but sighting one that looks fat and promising – before you’re even properly lined up – you pull the trigger, desperate to bag your first.

With half shut eyes you watch perhaps you last chance fly on brisk wings, already knowing the result in the hollow of your stomach.

You Missed! 

…and the sound of fluttering fades with your hopes, disappearing into the gray sky.

But out the corner of one eye, you see movement. Could it be?

Twisting your head, you see it…Yes!

A breath, held as you squint to make sure…  

Lined up and holding tight, you pull the trigger, wincing as the gun recoils.

Bang!

A Hit!

Whew – you bagged your first angel.

Now what?

Do you really have to gut it yourself?

Consider signing up to my mailing list and I’ll send you updates to help.

Andrew

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