Writing on the blog sponsored by the Rockstar Group, a U.K.-based entrepreneurial consulting firm, social media strategist Laura Hillman describes “10 commandments” to secure angel investment:

1. “Better the devil you know.” Prove your in-depth knowledge of your own business and that of your primary competitors by presenting potential investors with a comprehensive business plan a week before your pitch meeting. Include a description of your business, financial projections for the current and next two fiscal years, and background on your management team, short- and long-term business objectives, key products and services, target market, competitors, and main suppliers. The business plan also should touch on your marketing and sales strategies and your long-term exit plan. “Writing a detailed business plan requires succinct writing skills, clarity of style, and in-depth knowledge of your marketplace,” Hillman writes.

2. Protect your brilliant idea. If your business comprises an original idea or design, protect it to prevent competitors from replicating it. Clearly outline any patents, trademarks, and other proprietary measures that are pending or in place. Create a prototype of your product design and organize beta tests.

3. Put your money where your mouth is. Show potential angel investors how you’ve invested your own money in the business to demonstrate that you are “serious, passionate, and believe that the business will be successful,” Hillman says.

4. Know your angels. Research potential investors to learn the types of industries and companies they target, how much they typically invest, and what type of return they seek. Approach angels that have invested in businesses with a similar size, turnover, and risk profile as yours.

5. Know your numbers. Understand your company’s current financial position and provide realistic forecasts for the next several years. “Take a calculator with you,” Hillman says. “There is no shame in saying you always carry a calculator so there is absolutely no room for error.”

6. Be a master negotiator. Go into the pitch meeting knowing your bottom line. How much of your business are you willing to give away in return for the investment you seek?

7. Have the patience of a saint and the persistence of a true entrepreneur. You may be lucky and find an angel investor during your first pitch, but the process is more likely to take three to six months. Be tenacious yet humble, confident yet selfless.

8. Leverage your network. If an angel likes your idea but not your market niche, ask about other investors with different investment criteria who may be interested. Ask your mentors about individuals in their networks who may consider taking a stake in your business. “Leverage your mentors’ little black book,” Hillman advises.

9. Heed all good advice. After every pitch, ask the investor for feedback. Even if the pitch is successful, you could learn to improve your technique, which could stand you in good stead when you pitch to another potential investor.

10. Seek all the help you can get. Pitching to angel investors is one of an entrepreneur’s most important — and daunting — activities. Work with outside experts to prepare your business for private investment and to locate angels who will be receptive to your pitch.

Source: Rockstar Group

Posted September 1st, 2010 under Tech Transfer

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