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How to Pitch to Angel Investors

In Brent Bowers recent New York Times article “In Pitching to Angel Investors, Preparation Tops Zeal”, Bowers’ writes, “For entrepreneurs hoping to land start-up capital from angel investors, here’s what two recent studies found: Don’t get carried away when you pitch your product because the investors may lose interest faster than you can say “almost unlimited market.”

In Bowers’ article he cites Jeffrey Sohl, the director of the Center for Venture Research at the University of New Hampshire, estimate that there are 260, 500 active angel investors in the United States and they constitute the “largest source of seed and start-up capital for entrepreneurs.”

This vale of tears
Creative Commons License photo credit: e³°°°Bowers points out that:

Even last year, as the recession gathered force, these angels spent $19.2 billion on more than 55,000 ventures, he said, though that was down from $26 billion in 2007. The average investment for each deal last year was $346,500.

By contrast, venture capitalists made only 440 investments in start-ups last year, putting the bulk of their money in later stages of a company’s growth in deals that averaged $7.5 million, Mr. Sohl said. “Angels provide the seed and start-up funding that turns acorns into trees like Starbucks, FedEx, Amazon and Google,” Mr. Sohl said.

Two reports studying angel investors and cited in the Bowers’ article both agree that what angel investors are looking for  “is evidence of a market opportunity with growth potential, a strong management team and an exit strategy, including a list of possible acquirers, since the eventual sale of the companies they invest in is how they make money.”

The article lists the following tips gleaned from the two angel investor reports:

¶Memorize an “elevator pitch” for your product and its potential in 90 seconds or less. It will bolster your confidence, and you can recycle it to win over customers, vendors and employees.

¶Consider hiring a speech coach, but only one familiar with angel investors’ thinking.

¶Attend “pitching contests” that many business schools and angel groups sponsor.

¶In presentations, be upbeat but realistic in your profit and revenue projections. Better yet, draw up optimistic, middle-ground and pessimistic projections to show how carefully you have thought them through.

What tips do you have in securing funding from angel investors?

How to Construct an Elevator Pitch Online? Try the Harvard Business School Elevator Pitch Builder

When was the last time you had to describe yourself and what you do in order to get something you wanted? Were you successful? Do you know the key ingredients of a successful elevator pitch?

According to the Harvard Business School, “You have one minute to explain yourself, your business, your goals, and your passions. Your audience knows none of these. Are you prepared? Can you present your vision smoothly, enticing them to want to know more?”

Man on the Mound
Creative Commons License photo credit: Matt McGee

To make it even easier to craft your pitch, the Harvard Business School has an online tool that explains the mechanics behind the pitch and then steps you through creating your own pitch–even suggesting key words for you to use. Once you are done, the Harvard Business School Pitch Builder will  then analyze your completed pitch. Try it out here.