January 14, 2011
Guest Post by Amanda C. Frazier
If you’re out there looking for funding, I’ll bet you’re having a difficult time. The changing economy has made of world of difference in finding cash from angel investors for a start up.
There are things you can do. Let’s start with making your start up more attractive to angel investors. I’m not talking about changing your concept either.
I’m talking about start up valuations and the impact they have on your ability to score an investor. Seed stage angel investors take on a vast risk. Anything you can do to inflate your pre-money valuation will help. Even in this economy.
Here are some easy ways to increase your attractiveness to an investor, and give yourself a competitive advantage:
A Visual Business Plan
A business plan for angel investors doesn’t need to be 50 pages long. In fact, they don’t enjoy reading it; just as you probably didn’t enjoy writing it. In reality, these investors are just serial Entrepreneurs and they’re just as visual as you are.
Real Financial Statements
Your financial statements should be accurate as possible. Be conservative, but not too conservative.
This does not have to be you. There are many Start Up Founders who have no experience; they’re innovators. What’s important is you’re compensating your lack of experience in your board members, partnerships, and alliances.
Sweat Equity or Cash Investment
Angel Investors have an inflated risk compared to Venture Capitalists. What if you decide this isn’t for you, and start to slack? How would you feel if that was your cash going down the drain? Angel Investors want to see sweat equity or a cash investment from you, not just your idea. Your sweat equity and cash investment has another bonus: raising your valuation by having a prior investment (without adding debt).
Committed Strategic Partners
Angel Investors love committed strategic partners. It’s hard for a business to fail when it has so much support. Strategic partners also serve as distribution channels. Highly valuable for a start up valuation.
Customers Under Contract
This will raise your valuation. You may even be able to move up the ranks, and look for Venture Capitalists with this one. Any brand name customers here will benefit you even more.
Prototype or Beta Product
All seed stage Investors love prototypes and beta products. This one’s that simple.
Positive Press Coverage
Positive press coverage is fairly easy to get. You can pay a writer to “puff” your product, and rave about it in a press release. There are several press release companies that will send it for under $100.
While all of my above steps are not necessary, be assured anything you can do will increase your start up valuation; in turn increasing your chances of scoring angel investors. Good luck in your venture.
Plan to Start offers completely free research tools to Entrepreneurs and more. Check them out at: http://www.plantostart.com
About the Author
Amanda Frazier came from a working class family & has spent most of her life as an Entrepreneur. She attributes her success to what others would call a disability: “Working as an Entrepreneur was the only way to live with my ADD, I completely lack a sense of time. Now at just 25, Amanda’s the CEO of the Plan to Start Network. She’s also the founder of a high growth technology startup called the Synergy Hub, scheduled to launch in March 2011.