A Compelling Vision and Mission:

Angel investors are drawn to start-ups with a clear and compelling vision. They want to hear the back story that behind the founders idea and that they have a long-term mission beyond just making money. But, a sense of purpose and vision is not enough for investors. They want to know you are solving a real-world problem, and that you have identified who experiences this problem and what impact it has upon them. If you can demonstrate clearly the problem that you are solving and the demand or need for this then you are more likely to attract angel investment. A well-defined problem – and, of course, a clearly defined solution.

A Strong and Coachable Team:

Investors invest in people, not just ideas. A capable and dedicated team is a critical factor for angel investors. They look for founders who have the right mix of skills, experience, and determination to bring their vision to life and being coachable is equally important. Angel investors want to work with founders who are open to feedback, willing to learn, and adaptable. A team that can execute and adapt to change when necessary is a valuable asset. The team of advisors around you is also important, angels look for the right mix of expertise to support the founders and are also willing to help bring expertise needed to the table.

A Market with potential:

We’ve already explained that start-ups must address a genuine market need or pain point to attract angel investors. Investors also want to see that there is sizable demand for this product or service too. They need to know there is potential for a large and sustainable market. A thorough market analysis that clearly identifies your target customers and the sectors that you are targeting.
A clear overview of direct and indirect competition and how you differentiate from them in particular your closest competitor. What is different about your offering, is it price, customer service, quality, sustainability? Be really clear that you understand your competition.

Business models that scale and offer growth potential:

Angel investors are interested in companies with the potential to scale rapidly, and that have clear plans for monetising an opportunity. They want to invest in start-ups that can grow exponentially – or that have the potential to capture a lucrative niche in the market – and who can articulate a series of profitable revenue streams that will develop as the business scales. Scalability can be achieved through innovative business models, technology-driven solutions, or the ability to tap into new markets. If you can demonstrate a clear plan for scaling the company, and generate a substantial return on an investor’s investment, you will have their attention!

Traction and Milestones:

Angel investors look for evidence of traction and progress. It includes evidence that you have built a product and service that customers are delighted with and have a clear basis for what they will pay for. It also includes evidencing you have or will have, paying customers. There are different ways to evidence traction which include metrics like user growth, revenue, or partnerships. Start-ups that have reached significant milestones, such as securing paying customers or achieving product-market fit, are more attractive to investors. Demonstrating progress not only validates the business concept but also reduces the perceived risk for angel investors and gives you more opportunity to negotiate a business valuation in your favour.

Exit Strategy

Investors are keen to know how they will make their money back several years down the line. If you are not looking to sell the company or raise further investment to grow and scale further to provide exit opportunities for shareholders then angel investing is not for you. There are opportunties to be negotiated around leading the company even if the ownership changes but ultimately there will be a point maybe 5, 7 or 10 years down the line when the company might be floated on a stock exchange or bought over by a larger company looking to diversify. Angels need to understand what types of companies may be interested in a potential trade sale and this should be clear in your approach.

When it comes to attracting investors you don’t need to have all the answers but, the more work you have done to present your business in a way that gives investors the information they need to understand the opportunity, the more likely you are to secure meaningful conversations with investors.