Tips from an Angel

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Thank you to everyone who joined us for our first CEO Series webinar of 2012!  We were lucky to have Peggy Wallace, Managing Director of Golden Seeds to present “What are Angel Investors Looking for?”  The Golden Seeds angel group offers funds to early and growth-stage companies, with a preference for firms headed by women. 

Peggy was one of the first investors to join Golden Seeds in 2005 and has since invested in a diverse portfolio of 30 companies.  During the webinar, Peggy shared her investor’s perspective to small-business owners who are currently seeking or considering seeking angel investment.  Peggy outlined the current angel market and gave tips to entrepreneurs on pitching for investment.  Below are a few of the tips and takeaways that stood out to us:

• Angel investors look for companies that have a high-growth trajectory and are scalable.  Most often angel groups invest in companies in the technology, life sciences and medical industries.
   
• The Angel market is a big market – comparable to the venture capital market –both about $20 billion annual investment.
   
• Angels actually invest in MORE companies than venture capitalists (about 50,000 deals annually) but invest at a lower level.  An average angel investment is around $700,000, where an average initial venture capital investment is $5,000,000.
   
• Acquiring angel investment is usually a 138 day process from when you first apply to when you close.  Make sure you build that timeline into your business plan.
   
• Angels look for a talented management team.  If your company is not yet at the stage of having a team, there should be a plan in place to hire.  Typically, a portion of an angel investment is put towards hiring.
   
• Angels look for entrepreneurs who have spotted a market need and have built a company/product to solve that need.  An entrepreneur must demonstrate that there is a large market opportunity---a market of $1billion is attractive to an angel.
   
• When meeting with an angel investor, have a clear 30 second, 60 second, 5 minute and 10 minute pitch ready.  Angels might ask you to explain your company in any of those time constraints.
   
• What is your “go-to-market strategy?” This is most often the weakest part of an entrepreneur’s pitch, so make sure you have an answer carefully planned out before meeting with an investor.
   
• If an angel asks you a question after your pitch, pay attention – they may be giving you a second chance to say something you missed!
   
• Angels do not work with brokers so you should not pay someone to introduce you to an angel.  The Angel Capital Association is a good resource to help you find a local angel.
   
• Angels bring more than their dollars to your company.  They bring access to their networks and their passion for your business to succeed.

The full webinar, including Peggy’s PowerPoint slides, are available on our website.  We also invite you to register for our next CEO Series webinar-Negotiating with a Potential Investor- which will take place on February 22^nd.

BY Mary Duggan on January 27th, 2012

TAGS: small business | entrepreneur | capital | ceo series | ask the expert | angel investment