Angel dust

Seven tips for getting more money from angels.

It’s been a while. I’ve been on a nice long holiday in Europe – everything from hours in those great coffee shops reading papers to alpine walking through the mountains between Austria and Italy. The walking was really tough – those mountains are high and very steep but the views are magnificent. I’ve come back relaxed and refreshed.

 

Earlier this week I met with a company that secured $1.8 million from three angel investors about 14 months ago. Their product has been in the market now for nine months.

 

The problem; sales are almost nonexistent but they do have three contracts in advanced negotiation with national groups. If just one is successful then revenue will be good.

 

But right now they have three months left and then they’ll be out of cash. They need to go back to their investors to raise more capital. We spent quite some time talking about their approach at their investor meeting.

 

Here are the main points:

  • Do it now. Don’t wait till you’re out of money completely before you approach your investors. You’ll have absolutely no bargaining power left. Investors can basically set their own price when you are desperate. They know that you will be very anxious and they’ll know that you really can’t go anywhere else. You’ll have few options and you’ll get done over!
  • Make sure that you ask for enough money. Don’t scrimp at this stage. Do the sums and give yourself a little more breathing room that you think you need. You know that most things don’t proceed to plan, so give yourself some space.
  • Be confident. Go into that meeting with a very clear idea of what you are going to do and how you will progress the negotiations. Get something very positive in writing (if you can) from those you are negotiating with. This may be difficult but look for any evidence that you can get to support the successful outcome of the current negotiations.
  • Be very clear about the share price and fight hard to get the price you want. Don’t give away the farm now. The more confident you are then the better chance you’ll have of convincing investors that you will win one of these negotiations.
  • Don’t be put off. You need an answer now or you will not be able to continue negotiations with this “funding cloud” hanging over your head. Get that message through to the investors. The longer the decision is delayed the harder it will be for you to get a good deal from your investors.
  • Make sure that you talk to the investors before the meeting so that you are prepared for their questions and concerns. Prepare well and get answers for their questions and concerns. If they trust you and you have their confidence then you will almost certainly get the money.
  • Practice the presentation. Get in front of experienced businessperson/s and run your pitch by them. Get their feedback. Listen to what they say about your pitch. Fine tune and get the main points right. It does make a difference.

 

Remember to stride into that meeting knowing that you will be able to answer all their questions and that they will get the returns they want from your company. What you say and how you say it will be the difference between getting the money and failure.

 

Till next week…

 

Gail Geronimos, is the founder of Achaeus, which helps entrepreneurs develop their businesses and she has just started a new site www.pitchingtoinvestors.com with tools and tips about how to develop killer presentations to raise capital.

To read more Gail Geronimos blogs, click here.

 

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