What is a Business Angel looking for in an Entrepreneur?


E


ntrepreneurs need to have a two page executive summary of the business proposition, briefly stating the proposition, the market and the target niche, competition, amount spent to date, investment required, how additional funds are to be spent, the business model, brief details of management experience, and lastly the likely revenue and profit outcome over a number of years.


I often find that the business model, which explains how the model works (ie. sales price, gross margin and required overhead) as the business is geared up, is missing from these executive summaries.


The


Entrepreneur only has one opportunity with a potential business Angel at a first meeting and must be able to give a succinct presentation of no more than 10 minutes, preferably 5 minutes.


Many Entrepreneurs fail to attract interest at this stage due to poor executive


summaries and/


or presentations. For first time Entrepreneurs, I suggest you approach one of the Angel networks such as London Business Angels (www.londonbusinessangels.com), Advantage Business Angels (www. advantagebusinessangels.com) in the Midlands, or a similar organization in the Entrepreneurs area of operation. However, one word of caution, you still need to be well prepared, as in the 2009/10 tax year these UK angel networks received 9,640 business plans but only 764 of these were presented to their angel networks, less than 8% (www.bbaa.Org.uk/research- policy/market-research).


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An Entrepreneur is more likely to achieve a successful fund raise by presenting their opportunity at a presentation day to these types of Angel networks, as well as the support team of the professionals running these organizations. These networks have many Angel members looking for and willing to make a small investment of between £10,000 and £50,000, rather than one Angel willing to invest the full amount required, known as syndicate investors.


Entrepreneurs are naturally very enthusiastic about their product or service, and the Business Angels need to be careful they themselves do not get carried away with this enthusiasm.


When I look at an Entrepreneur, I


expect this enthusiasm as this enables them sell their product or service. However, I also look for at least one of the Entrepreneurs, if there are two or more, to be level headed, numerate, analytical and a strategic thinker, whom I would expect to be leading the business.


While this may be controversial in the current economic climate and the governments need to see youngsters of 18 to 25 years old being employed, I look for an Entrepreneur who has experienced success and failure in the past, and this usually means somebody of approximately 30 years old or older. This shows me that the Entrepreneur is likely to survive the knocks and blows that will inevitably follow in the journey to develop their business and achieve success.


I also expect the Entrepreneur to be


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Expert Angel Investor, Director and Author Jonathan Harrison shares exactly what a Business Angel is looking for in an Entrepreneur to consider an investment and how an Entrepreneur can improve their chances of a deal.


straight forward, and avoid any bullshit, when dealing with me as a Business Angel. We all have certain strengths and weaknesses, but I often find that very young Entrepreneurs do not recognize the need for additional skills in addition to their own. I always test this in the early stages of discussion. It


also helps, if the


recognizes that a particular Business Angel considering investing,


Entrepreneur has


skills they are missing and would help support their business development.


I also expect the Entrepreneurs to have a clear view, as to how financially they plan to fund the future growth of the business, as Angels investing should expect to assist funding two or more rounds, before a more significant fund raise from venture capital firms or pre IPO investment. In my new book, “Angels & Entrepreneurs”, I mention that I am surprised that an Entrepreneur has never questioned me about my ability to support subsequent investment rounds. This is important, as future additional investors are almost certainly going to consider why an existing investor is not willing to invest alongside them.


I am often approached as a Business Angel, by Entrepreneurs who have seen my profile somewhere on internet sites, quite openly stating that they immediately need funds to continue their business, often for relatively small amounts. In addition, more often than not I receive an impersonal email rather than a telephone call. This is like a red flag to a bull, and this immediately turns me off making any investment, indicating that the Entrepreneur has a poor approach to financial planning.


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