Imagine you are invited to a meeting with a group of angels interested in the technology your startup is using. Especially if this is your first business venture, you’re probably feeling intimidated.
The invitation may come in the form of an email, a phone call or someone gave you their business card and asked you to show up at their meeting. No matter how casual it may seem, this is a critical moment that may make or break your startup’s ability to blossom.
You Are Not Entitled To Their Attention
High-net-worth investors are involved with a myriad with projects and have trouble keeping up with names, faces or follow up phone calls. Don’t be surprised if your emails or text messages go nowhere as they probably have hundreds of them left unread.
If you have an appointment to give a presentation, you may as well leave it at that as you are already ahead of the pack. If there is uncertainty with what to give at the presentation, and you are not really in close contact with any of the organizers, it’s up to you to try and fill in the gaps.
Make Yourself Available
Your meeting or presentation may go very quickly, so you need to leave your mark by giving out business cards, pamphlets or free items (like pens or samples) that contain your startup’s branding. Even if members are not seemingly engaged during your pitch, leaving a reminder that you are available to be contacted will significantly increase your chance to a follow-up.
Don’t Assume They Are Familiar With Your Industry
While angel groups can attract some serious capital, many of them are rather risk-averse and may contain inexperienced investors. Your presentation should be free from jargon and get straight to its real-world use cases.
This is especially the case if your product is centered around blockchain technology, artificial intelligence or other fad technology. Interested investors are mostly interested in hype and profit potential.
Talking About Equity
Let’s face it, early investors are not necessarily your best friend and try to get the better end of the deal. An angel meeting is a perfect opportunity to have the sharks size you up and see how much equity they can get out of your startup.
If your startup is quite unique, there is really no cuttie cutter way to figure out how much equity to give an investor. The key is to predict the scalability of your business in the future. If your company makes $1 million a year profit, a 10% stake may not seem so bad. If it becomes $1 billion a year, it’s easy to see how a percentage-based stake is problematic.
To keep things simple, you may do a convertible note with a certain valuation cap so that a reasonable amount of equity will be given based on how the company advanced past fundraising. For example, you may set the maximum share value to $5, so a $50,000 investment will equal up to 10,000 shares. If the market cap quadruples, the angel investor has a smaller slice of the pie.
There is no doubt that your investors’ meeting will be quite stressful, which is why you should have all your bases covered. Taking the above points into consideration, hopefully, you will go into your first meeting with self-confidence and nothing but business on the brain.