5 things angel investors look for in startups

Who is an angel investor?

An Angel investor is one who invest his/her personal money on young and new entrepreneurs. They play key role in building successful entrepreneurs. Angel investors typically invest in the equity shares of the company and they wait for the share value to increase, so that they can sell those shares and gain profits out of that. The augmented price of those shares is their return on investment.

What an angel investor basically look for?

Value propositions of the products and services: Investors invest in companies where a large market for the product exists. Entrepreneurs should develop a product with certain value proposition and that value proposition will play a key role in opening the door for acquiring a large number of customers. Once the customers open their wallet and pay for the product, then no can stop the early stage ventures to grow as a successful enterprise.

Competitive Edge: In a bid to entice customers, plethora of players in the same segment come up with various discounts schemes and unique features for their products. This makes mandate for an entrepreneur to have a well differentiated proposition against the competitors. However, competition reduces the pain of an entrepreneur in terms of educating the customers. Intense competition creates wave in the marketplace and makes customers aware of the latest trends.

Deliberations and presentations: From an investor’s perspective, an entrepreneur should keep in mind some of the key factors while delivering the product in the marketplace. Things like understanding the market, presentation of the products and services, how the product is and how it is going to be delivered to the customers, warranty period of the product, pricing strategy of the product, after sales activities, package of the product and collection of payment. Execution and deliberation are considered as crucial tools for marketing and acquisition of customers.

Influential team members: For an early stage venture, it is very important to delegate tasks to the team member and keep an eye on how they execute the same. In general, a young company does not have a proper customer base, products, business strategy and the revenue model. So, the investors mull over things like – how powerful the team members are?, are they execution focused?, do they have the ability to understand the domain and attract customers? etc. Angels investors believe that founder and co-founder alone cannot execute the venture well without the support of the team members.

Mirror of operations: Primarily, an angel investor study the mindset of an entrepreneur like how he/she thinks of operating their business model, how detailed he has gone through the concept of his business, what is the ambition to grow the company, how much fund he/she requires, liquidity of the funds and whether is it the right time to raise funds, etc. It’s a knoen fact that at an early stage, risks are inherent. Hence, the whole bunch of these aspects provide angel investors a detailed over view of the new venture and help them fund accordingly.