Anyone ever deal with ANGEL INVESTORS?

[96ukssob]

We're looking to do some fund raising for our main company and seeking out a few angel inventors that are on our radar.

Prior, I've only worked with direct inventors (they give you $XX in return for %Y and be apart of the company), but in this case and since we are established and not seeking more "cooks in the kitchen" but rather just investors for a percent of the company.

Typically with angel investors, or from what I know, is you offer them a percentage based on your current company's performance, as well an exit strategy. We're looking to do about $700k to $1.2mm this year in revenue -- business is less than a year old too.

HOWEVER, I'm seeking investment funds to secure more staff and increase our revenue numbers. We don't need the money to be honest, but I do want to go this business exponentially and to do so, need to bring in funds to hire and support personnel.

With that said, any advice on how to "put things together?" Besides a business plan, exit strategy and detailed layout for use of funds, anything else we should include?

Normally, you get one chance in front of some of these groups so first impression is huge and don't want to risk it... so i figured I'd ask as I'm sure there are a few people here that's been in this boat before.

[Spudstr]

Angel investors usually want large cuts, just like VCs etc. They are treated just like any other investor. Some want to know the rate of return and how the return is paid either in ownership + return or just return. The problem with raising funds is they are going to gauge you for control of the company or control of the board.

[96ukssob]

Originally Posted by Spudstr

Angel investors usually want large cuts, just like VCs etc. They are treated just like any other investor. Some want to know the rate of return and how the return is paid either in ownership + return or just return. The problem with raising funds is they are going to gauge you for control of the company or control of the board.

typically when a company is new or just starting up, yes, but not in our case for fund raising vs. start-up capital.

showing actual growth and a positive ROI takes us out of the "high risk" investment crowd and allows us to give up 10-15% of the company for what we would normally have to do for 50%.

Angel investors, unlike VC's are not looking for control of a company, which is why I'm not looking for VC funding. VC's are a pain in the butt

[TisMe]

Traditional exit strategy for Angel Investors is the company going public, and a market developing for them to sell their shares.

Not sure how you'd lay that out while staying private, any exit would require that you meet targets to take them out as opposed to a public market to sell into.

It might be more costly than you think without an established market exit strategy.

[96ukssob]

Originally Posted by TisMe

Traditional exit strategy for Angel Investors is the company going public, and a market developing for them to sell their shares.

Not sure how you'd lay that out while staying private, any exit would require that you meet targets to take them out as opposed to a public market to sell into.

It might be more costly than you think without an established market exit strategy.

that's pretty much what I'm pondering. I'm not looking for a larger investment, mid $xxx,xxx

the goal is really acquisition rather than going public. I've been actively apart of 3 start-ups in the past, two sold to public companies, one was to a fortune 1000 2 years ago.

I know most angels don't like to see the objective is being acquired, but unless the opportunity to hire those types of executives are in place, it's a costly and time consuming venture.

honestly, not sure which path is the best but I know getting acquired is the easiest

[fris]

nope, only devil investors

[FreeHugeMovies]

If you don't need the investors and are making money then don't get any VC.

[96ukssob]

Originally Posted by FreeHugeMovies

If you don't need the investors and are making money then don't get any VC.

The difference is for growth. I don't have the resources now to staff up where I need to be. with the funding I can and triple the business in six months or less.

[iwiiiiiiiiii]

Hey bossku69, just my 2 cents about this subject, which I know a bit...

First, they are not angels at all, especially when they invest in a business they don't know. You have hard time to explain why shit happens. And having an investor on your back, give you a lot of pressure.

From what you're saying, getting money that you don't need, to secure your business, will be seen as a flag. Can be seen as you not trusting your business, you being bored, you feeling insecure etc. So make sure you have a business plan, showing why you want that money and how it gonna beneficiate the company, and mostly how it's gonna beneficiate the investor.

My last advise would be this, play the card that you're looking for a new partner, that will complete you (or you+other shareholders), that way, it doesn't look that you're looking for an ATM, and will definitely help you more than just getting money.

[shake]

For my last mainstream company we were approached by First Mark capital, it was an interesting offer but our company was self-funded from adult sites. It was great to talk to them though, and I really learned a lot about how the process works. Always good to have contacts in VC.

[sperbonzo]

Originally Posted by bossku69

Angel investors, unlike VC's are not looking for control of a company, which is why I'm not looking for VC funding. VC's are a pain in the butt

I was just about to warn you about VC's for that exact reason, but obviously you are already aware of the problems that they bring.... They are always trying to write insanely complex contracts that are usually an attempt to cut out the founders so that they can take over.








.

[PornDiscounts-V]

Thought of a bank loan?

Is it adult or mainstream?

Many investors are just that. Investors. They don't want anything to do with your company other than to make money off of it. We aren't talking Bain Capital taking over a sinking ship and making it float again. In that case they do want control. We are talking about giving you $400K to expand an already working platform in exchange for a piece of the company. Set your evaluation of the company realistically and they will talk to you. Tell them that $400K is worth is worth 5% stake in an 8,000,000 dollar company and they are going to laugh you out of this office. Mainly because if that is what you are valuating the company at, why not get a bank loan?

[epitome]

If you don't need the money don't go looking for it. Why dilute your equity? Just re-invest your profits.

As with many of the things on GFY though, things are probably not as rosy as they are painted.

[livexxx]

"We don't need the money to be honest"

Hmmm, so why an angel, why the money. Look at bootstrapping is it a 5yr exit, 1yr exit or just short term glory? Most investors typically ask "If you are so good, why do you need the money?"

IMHO go for the short term loss and long term gain and stay private, unless your business plan isn't scalable of course and you want their money until the next good idea ;)

[Phoenix]

Seems like they get to take too much of the company. Also if they are the type who want to be involved that could turn into a battle of the wills.
Id be wary about taking any outside investment. do it yourself if you can..you should be able to reinvest something off of those numbers you posted.

[bhutocracy]

Originally Posted by livexxx

"We don't need the money to be honest"

Hmmm, so why an angel, why the money. Look at bootstrapping is it a 5yr exit, 1yr exit or just short term glory? Most investors typically ask "If you are so good, why do you need the money?"

IMHO go for the short term loss and long term gain and stay private, unless your business plan isn't scalable of course and you want their money until the next good idea ;)

Sometimes it's a matter of growing big fast enough to ensure dominance. Slow bootstrapping whilst ideal can leave you open to someone coming in bigger and faster after you've proven a market but haven't grown enough to own it.. especially if there isn't 12 months of development lead time in the core business.

The business might not need money but giving 15-20% to de-risk against copycats and ensure dominance can be a good deal depending on the business. It could also bring exit a year or two closer which is worth a few % given the time value of money...

[woj]

what type of business are you in?

[Shap]

Just emailed you.

btw from what I've seen Angel Investors and VCs both operate in a similar way. Most of them put down $X for x% and want to have an exit within 3 to 5 years and they make or break on the exit. Is that what you are looking for?

[ilnjscb]

Originally Posted by bossku69

We're looking to do some fund raising for our main company and seeking out a few angel inventors that are on our radar.

Prior, I've only worked with direct inventors (they give you $XX in return for %Y and be apart of the company), but in this case and since we are established and not seeking more "cooks in the kitchen" but rather just investors for a percent of the company.

Typically with angel investors, or from what I know, is you offer them a percentage based on your current company's performance, as well an exit strategy. We're looking to do about $700k to $1.2mm this year in revenue -- business is less than a year old too.

HOWEVER, I'm seeking investment funds to secure more staff and increase our revenue numbers. We don't need the money to be honest, but I do want to go this business exponentially and to do so, need to bring in funds to hire and support personnel.

With that said, any advice on how to "put things together?" Besides a business plan, exit strategy and detailed layout for use of funds, anything else we should include?

Normally, you get one chance in front of some of these groups so first impression is huge and don't want to risk it... so i figured I'd ask as I'm sure there are a few people here that's been in this boat before.

Assuming you want a real answer, for a well received deal deck you additionally need:

Team bios, with relevant experience
Full financials, with budgets and 18 month cash flow
Market analysis slides, with profiles of competitors and their weaknesses
Development flow chart
Milestones reached
Contracts in place
Make sure you can back everything up and drill down extemporaneously

[grzepa]

lol i've read the topic as ANAL INVESTORS

[mineistaken]

Originally Posted by sperbonzo

I was just about to warn you about VC's for that exact reason, but obviously you are already aware of the problems that they bring.... They are always trying to write insanely complex contracts that are usually an attempt to cut out the founders so that they can take over.

.

And its normal, not many people would like to invest their money without getting the control.
My buddy does invest in ompanies, on a small scale, like 50.000Eur , he does not invest if he does not get 51% share. I mean startups here, obviously if a company is bigger and you invest smaler you don't get 51%, but some serious control is a must.

[mineistaken]

Originally Posted by livexxx

"We don't need the money to be honest"

Hmmm, so why an angel, why the money.

I assume he means that his company could be fine without the money, but with the money it coud triple in 6 months. So he does not need the money, but he wants the money for expansion.

[bean-aid]

I always thought I needed financial backing and I always managed to do it without it.

Good luck... watch Shark Tank to get an idea.

[kyro]

no offense but you have 0 shot in hell of getting angel investment money.