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Angel Investor Quick Tip

in Angel Fund Raising,How To

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With the first angel investor meetings I ever had, I made a number of mistakes…

But one really basic mistake in particular helped stall my angel investor fund raising process.

Let me tell you about it….

I had invented a fire escape ladder based on a concept I’d sketched as a teenager…I know, misspent youth right?!?

Anyway, while at business school I entered a business plan competition and digging through the 1001 business ideas and concepts I had – for some unknown, unfathomable reason….my fire escape ladder idea was the one I grabbed a hold of and decided to submit as the core concept for the competition.

Now roll the reel forward some three or four weeks – those weeks intensely crammed with the blackest coffee, lots of trips out to Home Depot and Lowes and late nights of online research.

Voila! A business plan to be proud of! (Well, I thought so anyway…)

Now let’s jump forward in time another six months….

I’d found myself a partner, we’d created a prototype, the business plan had been bulked out with more data, we’d brought mothers together for a ‘focus group’ and started to understand how they thought about family safety, their concerns, their needs….

…we’d spent time at fire departments talking to fire experts…somehow or other we’d managed to really understand the market, the customer (retailer), the consumer (the user) and we had even fleshed out the ‘how’ of starting and running the business.

In fact, we were hyper passionate and engaged on our new business…

Now came the angel investors…

I’ve covered some of the elements of finding angel investors in other posts. In fact, I offer a free audio ‘taster’ on the subject at the bottom of this blog. (You should see a popup if you refresh the page). Given that fact and the additional fact that I promised a ‘quick tip’….

Here’s the hindsight ‘Angel Investor Quick Tip’ I promised you…

We went into those meetings completely passionate and overflowing with data, ideas, our business model and how we were going to change the world…

Can you picture it?

Two fresh faced, enthusiastic entrepreneurs nailing the conversation and completely overwhelming any resistance or challenges from the investors.

…and that was exactly the point….

…we overwhelmed them. It was a one way process of communication – Us telling Them…

We didn’t listen….

We didn’t get them to join in with our passion….

We didn’t collaborate and explore the business concept together…

We tried to WOW them with our knowledge….

We didn’t try to understand what were their interests or drivers…

Simple stuff right?

I’m sure you’ve never made the same mistake when it came to a subject you were passionate about right?

…must just be me then…

By the way…can you do me a favor?

I would like to listen to what you need….

Can you tell me?

Tell Me Your Question

Let me know what you thought of this quick tip through the comments or contact page and get occasional email updates by adding your name and email in the box (right side column) and if you do, I’ll send you a FREE report telling you the key questions investors WILL ask you. I know – can’t say better than FREE right?!?!? :)

Best

Andrew

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

in Angel Fund Raising,How To

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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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How to Close an Angel Investor

in Angel Fund Raising,How To

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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Quick Poll – Its All about YOU! (And always has been…)

in Offering Help

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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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How to Get Cheap Money for Your Startup (Part 2)

in How To,Video

Here is a really quick video (about four minutes….) with ONE tip that will help you a) lock in an angel investor but most importantly b) QUALIFY them to make sure they’re ‘cheap’ money and not going to be a pain in the ass investor…

Sign up for more video updates and add you comments below.

Sign up for more video updates and add you comments below.

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How to get cheap money for your startup

in Angel Fund Raising,How To,Video

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How do I find an Angel Investor?

in Angel Fund Raising,How To,Offering Help

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Perhaps the most common question I get asked is “How do I find an Angel Investor?”

Unfortunately they’re is no easy answer like…”Go to this site, sign up and voila, choose an Angel Investor…”

Actually – that’s not exactly accurate, there are two sites that come to mind – The Go Big Network and Funding Post - you should check them out…

I seem to recall some data from somewhere that the majority of Angel Investors invest with a 60 mile radius of where they live – perhaps its an urban myth but that sounds about right to me because, after all, many angels like to be close to their investments so they can get involved to some degree.

In my experience, Angel Investing tends to be on a regional rather than an national or international basis – take that into consideration before you stump up your hard earned cash to sign up to a broad brush internet service that promises to deliver handfuls of Angel Investors like an endless beauty parade – probably not going to happen unless you live in a few areas where they have high concentrations of angels…i.e. New York, San Francisco and perhaps Boston. And if you do live in such an place, why do you need to use a website service anyway – just go hang out at your local coffee roastery…

One point to make is Angel investors (or accredited investors) are defined as:

“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;”

For the full SEC Definition which includes all definitions – go here

…but one point I’d like to make is you can see from the two key definitions above that angels are not that rarified a set of individuals – you could actually be living next door to one right now or perhaps have spoken to a few over the last few weeks or months during some social event. That’s a critical point – in my not so humble opinion, one of the best ways to find an angel investor is literally through networking – so where would I hunt for angel investors?

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Are you this kind of person?

in How To,Offering Help,Raising Money

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You can get almost everything you need for free on the web…

So much so that I spent months looking through different sites, subscribing to different email lists and following certain bloggers. I thought I could get everything I needed from multiple sources and save myself some cash. After all, you can get nearly everything you need for free online right?

But then I realized something.  Yes, I probably could…if I was looking for a recipe for chocolate brownies or the ten steps to teach my dog to sit and roll over, then you can probably find everything you need for free online. But I realized, after spending months pulling different strands of information together, that I was going to have to take a risk and trust that the person who was offering me a product that I’d have to pay for, was not a shark and the product would be worth more than I paid for it…

I had to, in short, suspend my disbelief that this person was going to screw me…tough when it was more than $100 and how much about this guy did I really know? I guess the reason I took the step and bought the product was because what I wanted to know was not as unimportant as a chocolate brownie recipe – I wanted the information and a) didn’t want to wait and spend the hours or days pulling the information together and b) I wanted to make sure the information was good information…I made the decision to trust that person and thankfully, I wasn’t disappointed…

So – I recently launched (in a very quiet manner…) two products / services….the first was offering ten entrepreneurs one on one time to help them prepare for angel or venture capital funding….I called that program “1 of 10″ and details are here. 

Most of the ten slots sold out quite quickly – so some people suspended their disbelief and were committed enough to their new businesses, that piecing together information from multiple sources and ‘winging it’ wasn’t good enough. I guess that when something is as important as fulfilling your lifetime dream of starting a business, investing in improving your chances of success is a smart thing to do…

The other quiet launch was of an audio product which was designed to help people supercharge their fund raising from angel investors in particular.  Details of that product are here. 

This audio product is a pre-launch of a more comprehensive (but probably more expensive) product with video, pdfs and audio.

So after writing multiple posts to help people I finally dipped my toe in the water and create some products. The goal of those products is to bring together years of experience and help people who want to increase their chances of raising money to fund their new or young businesses.  Some readers have asked why? And even thought (or implied…) that it was somehow wrong of me to do so…the short answer is, there are plenty of free resources online but I’m a firm believer that you get what you pay for…if something is worthwhile, then there is usually a cost involved – like any business, the customer needs to decide if the item they wish to buy is worth the price tag attached.  I can honestly say that making a few hundred bucks for a product is not a real motivator – but, and here’s why there’s a price tag at all, knowing people appreciate the content enough to purchase them and based on that purchase will likely take the content and use it to start or supercharge their business IS a huge motivator.

Could I give it all away for free? Sure. Would people value the content as much…you know, somehow I doubt it and anyway, what is the price tag for saving yourself months and increasing your chances of getting the money you need to fulfill your dream?

Last question of the post – what help do you need? or What question do you have? If you could get help with anything related to your startup – what would that be? Anything goes related to bootstrapping, angel investors, Venture capitalist or even broader.

Add a comment or send me an email via the contact page. 

Best

Andrew

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Supercharge your Angel Investor Fund Raising

in Angel Fund Raising,Audio,How To,Podcast

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As many of your know, I’ve been working on a set of tools designed to help you if you are going through the fund raising process for a new or existing company…a friend suggested I should try to bring together some of the unique experiences I’ve had and help other entrepreneurs who are looking to get investors for a new or an existing business.

I wish I could thank this pal for urging me to start this but right now, I want to chase him down and beat him to within an inch of his life with a large inflatable mallet, because this really isn’t easy. What would be easy would be to take an existing book or series of blog posts from others and pull something half assed together – but what would be the point….?

No – I want to create tools which are all the things I wish I had when I spent a year or so spinning my wheels trying to raise money the first time around. What could have saved me months and allowed me to get my first company to market that much sooner?

Those are the tools I want to get out to folks….those months could have meant increasing the chances of survival and success….now, the business did well, but they don’t always…months matter!

You can always try to raise money for your business with advice from friends and the like, but in my view, we all need all the help we can get when its something as critical as realizing our dreams for starting a business…So, I’m doing my best to bring together learnings from a number of years and experiences but *whew* it really isn’t easy because I throw away probably half of what I create because I want them to be that good for you – if you are raising money for your business, because lets face it, you don’t have the time to mess around on crap.

If you watched the short video on ‘Who is the Funding Guru?’ – you’ll know that I was asked to sit on the Small Business Council by the UK Government and with a small group of entrepreneurs I worked on funding and other issues relating to entrepreneurs and start-ups…that brought me together with some amazing folks on both sides of the table – entrepreneurs and investors. I think I can help if you are looking to raise funds for your business…

So – before I rant some more…the course should be ready in March (huge amounts of fingers being crossed…so much so that its making it tough to type…OK, I’ll uncross them until I’ve finished typing).Until then, I wanted to take the audio portion from one module which focuses on “How to Supercharge your Angel Fund Raising”.

This audio module will ultimately have video, pdf support and other elements but in the meantime – thought I would get the audio out there and start helping you if you want to find and get those angel investors so you can start building that amazing business you have been dreaming about…the great thing is, once you understand how powerful this technique can be – then you can use it for speeding up you fund raising now and for every funding process you and your friends go through… Get the audio course here

Andrew

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

in Angel Fund Raising,How To,Raising Money

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The first article is here and the second here and the third here, just in case you missed them…

If you have not had a chance to read them, let me give you a brief cliffs notes – this series of articles responds to the question I get asked often about Angel Investors…

Question 1: “What are Angle Investors looking for?”

When someone asks that question, it shows the person asking has an appreciation that the fund raising process is not 2 dimensional or binary…in other words, they recognize the answer to…

“What are angel investors looking for?”….

….is broader than just “To Make Money!”

By looking for a better answers than ‘just to make money’, you are moving yourself closer understanding the real levers you need to use when meeting and building a relationship with angel investors. These are key to successfully raising Angel Investor money – and that, along with helping people with the Venture Capital fund raising too…is what this site is ALL about.

So, without further ado…I like to outline what I believe is the fourth installment of ”What Are Angel Investors Looking For? The Six Key Motivations of Angel Investors”.

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