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How to convince a business angel ?

Getting financial support from a business angel can help startups get off to a good start in their entrepreneurial journey. However, getting financed by a business angel is not that simple. Indeed, it is necessary to convince the business angel that the startup has a strong development potential. Thanks to this article, you will know how to convince a business angel to obtain financing.

Advimotion is a financial consulting firm that assists startups and SMEs in obtaining non-dilutive financing and equity fundraising. We also act as advisors in corporate divestiture transactions to best represent the interests of sellers.

We offer strategic consulting and outsourced CFO services to ensure the financial and operational monitoring of your business. Finally, we take care of the drafting of investor documentation : business plan, pitch deck, creation of reporting files and valuation calculations.

For more information, please contact us.

But first, what is a business angel ?

A business angel is a natural person who will invest in a startup that has an innovative aspect. In addition to capital, the latter makes available his address book and his experience to help the startup in its activity. In general, business angels are active or retired entrepreneurs and often belong to investment companies. However, in order to invest in a company, business angels need to believe in the project, in its innovative character, in the team that implements it and in the soundness of the business plan. The objective of the business angel is to realize a capital gain within five years with a significant return on investment. This is commensurate with the risk taken.

How to convince a business angel ?

Prepare carefully the selection steps

Convincing business angels is done during a selection process. There are many candidates and not all requests are satisfied. Hence the interest to prepare well this test. We remind you that the selection is based on the feasibility and potential success of the project and the competence of the team. As a general rule, a pre-selection is made on the basis of a written presentation of the project to the selection committee of the business angel network. If the project is selected according to the criteria of relevance, feasibility and innovation, it will be supported orally for final validation by one or more business angels. The latter will then examine with the startup the conditions of their entry into the capital.

Demonstrate the profit potential of the company

The best way to prove that your business idea is viable is to rely on a business plan. This gives you something to work with to estimate projected revenues and expenses. Show that there is a large and growing demand for your product/service. Use statistics, prospective studies in the field that you find on the Internet and in press articles to illustrate the need for your product/service.

Specify your strengths to the business angel

Rely on your experience in this particular type of business. If not, explain how the experience you have gained allows you to successfully run your new startup. Then add anything that will convince your investor of your potential for success. This can include training as well as team member accomplishments that demonstrate you have the intelligence, determination, and desire to collectively succeed the startup.

Describe the business to the business angel

You don’t need to go into too much detail here, but you do need to show your potential investor that you’ve thought through every aspect of the business. And, that you know how to anticipate, plan, create and therefore lead. If you sell physical products, explain how they will be purchased, stored, delivered, etc. If you are starting a service business, describe, in general terms, how the customer will be taken care of and the advantages of these services over other competitors. Finally, believe strongly in your project, this will allow you to be persuasive to convince the business angel.

Synergy and human relations

The personality and the state of mind of the entrepreneur are above all what a business angel is banking on. Humanism is an undeniable vector of economic growth but also a virtuous approach that goes far beyond the search for profit because it puts the human being at the heart of the entrepreneur’s job. Relying on strong human relationships that create synergies is therefore an essential prerequisite for all entrepreneurs wishing to develop and implement a successful project.

The investor will be sensitive to certain assets, certain skills and qualities that are specific to you, such as your positivity, your ability to listen, your determination or your open-mindedness. He will pay attention to your ability to adapt, given that financial forecasts never go exactly as planned. Businesses are often willing to invest in a person rather than a project in order to establish a relationship of knowledge sharing. Is an essential element for the smooth running of the project and its success.

Modesty and humility

Finding the right balance in terms of business valuation is not to be neglected. Since there are fewer financing offers than financing requests, having an ego and overvaluing your project can lead business angels to eliminate your project from the selection process. Selling your project within the limits of reason is crucial to remain persuasive and convincing.

If you need support in writing the financial documents (business plan, pitch deck) that will allow you to get in touch with business angels in order to raise funds, don’t hesitate to contact Advimotion.

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