While each investment will vary, we have a standard set of criteria in which we evaluate all pitches:
Every business needs to address a problem(s). We are looking for companies who are clear about the problem they are solving and why. The bigger the problem, the more we are inclined to invest.
Make sure your company’s solution solves the problem you’ve identified.
Does your solution have some proprietary features that distinguish you from potential competitors in the market? Attributes that convey competitive advantage include intellectual property protection, exclusive licenses, exclusive marketing and distribution relationships, strong brands, scarce human resources (i.e. knowledge and skills), and access to scarce raw materials.
We look high quality people with a track record of leadership and performance – either in the company’s specific industry or in prior ventures.
We also look at your team’s passion for and commitment to the new business idea, and your ability to inspire confidence among future stakeholders, including employees, potential customers, and investors. At the end of the day, we are investing in you, so be prepared to also get some advice.
How do you intend to bring in the revenues? Do you have a sound Business Model in place with a well thought out Business Plan?
There are plenty of great business ideas – but not all businesses will generate returns that justify angel investor and venture capital financing. Therefore, providing a solution to a problem with a large potential market is essential.
We look for companies that can grow quickly and manage the scale necessary to succeed. Your company must demonstrate a plan to generate significant profits beyond the initial product idea.
You must demonstrate “skin in the game” – whether in cash or in kind. We want to know that you are committed to the success of your company.
A set of financials – both past and projected – that you can explain is important. We are comforted when you can talk about your numbers in a clearly articulated manner. If you can explain your burn rate and know how long your runway is, it gives us greater comfort that you are all over your business.
Progress is important. Tell us what you’ve accomplished since you started your business and in what timeframe.
Our members typically seek returns of at least ten times their initial investment in around five years. This level of return on investment is essential due to the high risk and likelihood of failure among early stage ventures. Thus, a clearly articulated exit strategy – how angel investors will extract such returns – is essential. For example, do you plan to sell the company to an established corporation in your industry? Or will your exit be through subsequent rounds of financing – venture capital or the public markets? Angel investors are not just interested in the strategy you select, but more importantly in the how – the operational strategy that shows specific steps you will take to achieve the exit.