Finding Your Angel

Finding Your Angel

Angel investors can be a start-up’s greatest ally – so long as you can convince them not only that your idea is great, but that you’re worth investing in.

According to recent reports, angel investors in Ireland are set to hand over €85m to more than 250 of the country’s most promising start-ups between now and 2022. The Halo Business Angel Network (HBAN), a joint initiative between InterTradeIreland and Enterprise Ireland, says this represents a 79% increase over the previous five years.

If you’re an Irish start-up, then, this is clearly magnificent news. But only if you can convince these deep-pocketed individuals that your business is one they should be investing in.

The way to go about this, according to the HBAN and just about anyone who knows anything about the angel investment process, is to make them believe that they can invest in you.

Angels invest in people

For proof that angels invest in people above all else, just tune in to a random episode of Dragons’ Den and you’ll likely hear the ‘dragons’ tell a stuttering hopeful that they like them. The fact that they aren’t 100% sold on the entrepreneur’s idea sometimes seems secondary.

“I typically invest in people,” confirms investor John Rampton, writing on Entrepreneur.com. “You could walk into my office and pitch me one heck of a product, yet if I’m not sold on you as a person, forget about me investing in your company.”

The importance of selling yourself to an angel – and, thus, demonstrating that you’re the right person to see the idea through – simply cannot be overstated. In fact, when Galway-based medtech company Signum Surgical secured €2.6m in funding last year, Declan Quinn, the lead angel for the HBAN syndicate that backed them, said: “In start-ups like this, one of the key investment factors is your belief in the founders’ ability to transform their idea into something tangible with real commercial value.”

Credibility, passion and flexibility

To be clear, wooing an angel has nothing to do with a dapper wardrobe or expensive hairdo – it’s your credibility, mingled with a dash of passion, a grasp of the market and a positive, flexible attitude. “How people dress and all the rest of it, I couldn’t give a monkey’s,” says Fiona Cruickshank, co-founder of UK-based Gabriel Investors. “What I’m looking for is pretty boring: people with good ideas who just want to get on with it.”

Michael Queen, president of the Surrey 100 Club, a leading angel investment network, has had thousands of hopefuls standing before him looking for investment over the past three decades. He says that what he’s looking for is someone he can believe in (or better still, a team of people), with a strong idea and lots of tenacity. “Running a small business is incredibly stressful and demanding and it requires people to commit to a ridiculous extent,” says Queen. “So angels are looking for someone with almost unusual levels of resilience – as well as a realistic idea of what’s going to be involved.”

 “What I’m looking for is pretty boring: people with good ideas who just want to get on with it”
 

Fiona Cruickshank, co-founder, Gabriel Investors

The ability to grasp the bigger picture is a very attractive attribute in an entrepreneur, and Queen says that not everyone has this. New inventors are among the worst offenders. “They have one amazing engineering idea and are obsessed with the sheer brilliance of it,” he says, “but they can’t understand that people who are investing want to know who they are going to sell it to, how it compares to the competition and why people are going to buy it.”

While skilled salespeople with persuasive charm often know just how to beguile an angel, Queen cautions that seasoned investors will recognise when they are being sold to and will dig deeper than the patter. He does admit, however, that it’s always easy to sit and listen to someone who has good interpersonal skills – which is perhaps something that a novice entrepreneur can work on.

No one’s perfect

One word that regularly crops up when angels are describing someone who is investable is ‘authentic’. They want real people – even those with gaps in their skill set. Cruickshank, for one, is turned off by people saying “I can do everything”, when she strongly suspects that they can’t. “If they are 110%, full-on, ‘This is brilliant, I’m brilliant’, that’s not going to cut it,” she says. “That’s not real life.”

Finally, what’s worth remembering is that angels aren’t in this for charity or as a favour to struggling start-ups; they’re out to make money. While many will get a personal kick out of backing a business that succeeds – especially if they feel like their guidance and contacts have played a part – they’ll be happiest if your exit strategy works out and you all leave with slightly fatter wallets.

Understanding this may help you to appreciate how important it is that your would-be backer needs to believe that you won’t waver when the going gets tough. Think not of your pitch as a desperate plea for cash, then, but as a well-rounded business proposition – with you as the iron-willed ringleader who can capably hold it all together.

Top tips

Four ways to get angels onside:

Build up a personal relationship with your angel. The Dublin-based Digital Skills Academy states that many entrepreneurs are surprised by just how approachable angels are. “They are actually looking to fund people just like you.”

Share your passion. “Yes, you need a great product, interesting idea and a practical business model,” says Rashid Ajami who raised £4.1m (€4.86m) of development capital for his student community platform Campus Society, “but the passion to deliver something you believe in is paramount.”

Practise your pitch. “And really understand your key data, too,” says Fiona Cruickshank. “When people don’t know the numbers, it feels like you haven’t got the whole package.”

Welcome angels’ input. HBAN likens the equity process to a marriage with a planned divorce (the exit), and says: “Investors are likely to want to join the board of directors and take an active part in the development of the business.” So be prepared for this.

 

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