Checklist on What Business Angels Look For

Most Business Angels typically look at the following things:

  • The management team that will control the direction and the operation of the venture.

  • The experience and past business record of the entrepreneur or driving force behind the business.

  • The potential return on the investment.

  • What financial involvement the entrepreneur and the entrepreneur’s business partners will be making into the business. (That is, what hurt money they will have in the operation.

  • The product or service being offered and how they stack up to competitors.

  • Whether there is a market for the product and services, or whether one can be developed in the short term.

  • Is the location of the business in an area where the Angel can have reasonable access to monitor what is happening?

  • Will the experience and skills of the Angel be an advantage to the business and will the entrepreneur accept that the Angel will want to have participation?

The Angel also wants to know:

  • Would you be prepared to give up some of the equity or share in your business in exchange for funding?

  • Are you happy to allow the Angel investor to have a hands-on role in the business in some way?

  • Do you really believe that your business has sufficient potential to be successful and to be able to provide a reasonable return to the Angel for the investment put in?

  • Can you honestly say that your business has a good product or service to offer the marketplace and that you would be prepared to guarantee everything you had, including your home, because of your belief in the future success of your operation?

  • Would you be able to offer the business Angel an “exit strategy”, that is, can you put down in your business plan a way that the Angel can recoup their investment in the future, either by a trade sale of the business, or by the business becoming a public company, or by an offer of repurchase of the Angel’s stake in the business?

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