There’s one thing to write the so-called perfect résumé when applying for a job and another thing to prepare a profile when approaching a potential investor – angel or otherwise. I’m not talking about a LinkedIn-like profile which is the result of a series of templated prompts that help you produce a summary of skills, achievements and schooling about you, the entrepreneur. I’m talking about the profile that is supposed to positively impress the lenders/investors when you knock at their doors.
Let’s face it, we all have noticed how some entrepreneurs seem to have no trouble attracting investors, while others, even with the greatest and most impressive business plan, struggle with it. If truth be told, angel investors are humans like you and me and more often than not personal traits make or break the rapport even before the real discussion about the investment is started.
Seen from the sidelines, it shouldn’t make business sense, but capital angels look to invest in entrepreneurs who have a resolute passion and sense of urgency. We all have heard about the proverbial fire-in-the-belly: when you are ready to fight with energy and determination for what you believe is a great project. So if you don’t have this fire-in-the-belly, you probably won’t succeed, even with funding. That the thinking behind it.
Now of course, this fire-in-the-belly has to be in concert with a variety of visible characteristics that indicate that you as the entrepreneur have the attitude and practical skills to make it happen. You can go online and find out all kinds of advice about, it but I find that the six-pack or the quintessential six should be addressed preponderantly. So here’s what’s expected from the budding entrepreneur:
1. Articulation: talking and writing convincingly. From the film producing business the expression “elevator pitch” says it all: you have to concisely explain the unique, compelling value of the proposed venture in both written terms and in oral presentations. It’s true that some investors favour more one over the other. That is why you also have to find out as much as possible about the investor as you can. Also, passion and hastiness are not one and the same: you have to carefully listen before answering questions.
2. Contextual background. As a successful business person you have to prove your visibility and credibility. Your background as a member of the business community is verifiable through the network of trusted suppliers, customers, partners, and even previous investors. These are critical to any venture. In fact a successful track record with previous investors is a home run.
3. Attitude of full disclosure. Let’s face it: nobody is perfect. You have to be agreeable to clearly providing details of weaknesses as well as strengths of the proposed venture, and also of the seen challenges ahead. The participation of the angel investor in the company, at least at the advisory level, should be welcome without any shade of reluctance.
4. Value of newness or intellectual property. Besides credible cash flows, you have to convincingly present a patent (pending), a registered trademark or design, a set of internet domains, or anything that can create equity value for the partners. This intellectual property must have current and not some nostalgic value.
5. Self-assurance and proper demeanour. Be calm and self-confident, rather than frantic. Desperation and passion are different things. Confidently show what you have achieved so far with your project: milestones as well as planned steps, which indicate reasonable expectations. Also, consider that investors need sufficient time to find capital, as most of them do not invest their own money.
6. Realism and pragmatism. In case you’ve tried to access capital before you know that almost nobody succeeds the first time they try. Hence you have to recognize and accept things as they are and react suitably. Rejection could appear almost inevitable until the last moment, but things could quickly change their direction when investors see that another element of your proposal or new current conditions could improve their prospects for achieving their goals.
In previous articles and blogs I always made a distinction between angel investors and VCs (venture capitalists). One of the many differences between the two categories usually is that the angel investor may invest during the proto phase of a project (idea, innovative process, invention, etc) when the technology, product or service is at the embryonic stage and the market need is difficult to be properly assessed. Certain products and services cannot be properly evaluated without being presented to focus groups and the like.
In spite of what is usually believed, angel investors don’t like taking risks any more than VCs, but with their flair and experience in start-ups they may see the value of the venture and act more liberally than the VCs that require consensus amongst them and true diligent processes that lead to a possible investment.
Therefore the angel investor also has to rely on your profile and the way you would present yourself. After all the astute investor, in order to eventually be successful, has to spot not only winning technologies but winning people, and, as I said at the beginning of this article, different investors have different views of what a winner looks like. As such it is natural that they try to guess your traits as a budding entrepreneur, like integrity, devotion, foresight, cleverness, a sense of direction and leadership.
Entrepreneurship is not for everybody and I often wrote about that. Yet if you truly want to be your own boss and run your own business (even if with a partner/investor), you have to look into your mind’s mirror and discuss with yourself if you really posses the traits which are necessary for becoming a successful entrepreneur. In fact, to gain more objectivity into this matter, ask a friend or an experienced entrepreneur to evaluate your new venture and if you are suitably prepared for it. You may not hear exactly what you’d like to hear but better sooner than later when unnecessary mistakes would be made during the wrong course of action.
And remember, entrepreneurs do not believe in luck (even if once in a while they’d admit that they have been lucky); they believe that like them, if you have the ardent will to succeed, you could gradually and willingly change yourself and develop the right skills. While this process of transformation for becoming a budding entrepreneur may be painful the rewards in the future are high enough to justify it.
And don’t forget, in Alberta we have far more entrepreneurs than available angel investors. That is why I often recommend that in our province’s business climate it is sometimes more suitable to consider the bootstrapping approach and start your venture rather than seeking the elusive few angel investors from around here. I’ve written an article about that choice of entrepreneurial direction.
Chris Cozea is a rich media developer and a writer based in Calgary, Alberta, Canada. He is the President of Alta CineVision Incorporated and Interactive Business Networks Ltd. Some of his current projects include Canada Interactive Business portals and AlbertaWiki. Chris has researched Alberta’s early history and produced various TV programs about the opening of the Canadian West.LinkedIn profile: http://ca.linkedin.com/in/ccozea