An Angel Investor’s Guide to Cracking the Mind of an Angel Investor

“I would like to introduce myself to you. I am an angel investor. You may not have met the likes of me. I play several different roles. I am a listener to your presentations, a challenger of your strategy, an investigator conducting due diligence, a negotiator over investment terms, and finally a check writer to fund your growth.”


forumWho better to give advice for an angel investment pitch, than  an angel investor himself? Edward Harley, Angel Investor and member of the Keiretsu Forum, lays out exactly what you need to do to become part of the “top 5% of all presenters.” Though his context lies in the world of investor pitches, his advice is true and useful for anybody presenting about any subject.

Usually, you’ll have about 10 minutes to “pitch” your idea to an investor. Within those few minutes you need to successfully tell Harley’s seven stories:

1. The ‘fundamental business logic’ story

This is the part of your presentation that illustrates how you don’t just have an idea, but a logical approach to making a business out of it. Great ideas are valuable, but relatively useless without proper execution. Its great execution that changes the world. That is what investors, and really just audiences want understand from you; the steps you took or are taking to realize your idea. In other words, share your story.

2. The ‘total available market’ story

This section of your presentation is essentially the evidence you are using to support your “fundamental business logic story.” You are highlighting the path your business will walk on, and explaining how wide the passageway is.

3.’This is a $50m to $100m business’ story

Continuing on the”evidence” of your business logic story, this portion of the presentation is meant to display a sense of value. Your need to make your audience understand that your business venture is not only credible, but an enticing and convenient investment for them.

4. ‘The product can be differentiated’ story

Here, you’ll show why and how you are different and/or better than your competition. This is a key point. Your audience wants to know and identify your specialty. After all, it is that very specialty that people will remember you by. Harley says it that his  “expectation is that [he] will hear about a solution that is significantly better for the customer than all their existing choices, by ‘significantly better’, [he] mean[s] 10X better.”

5. ‘The product/service can be sold’ story

This area of your presentation should circle back to the past four sections. Here you should reaffirm that your product or service is reliable and has the potential to lead to satisfying results.

6. ‘This management team can do it’ story

You’ve made your case for the product or service, now you have to establish your credibility, and the credibility of your team, as a valuable, effective, and reliable workers.

7. ‘This is a good investment for the investor’ story

This portion of the presentation should sum everything up and reiterate the essential selling points. Here you are making the idea of an investment, sale, or whatever call-to-action concrete.

At the end of all this, it is time to ask yourself through the mentality of an investor, “Could I, your listener, replay to another person the very basics of your venture and how your target customers will benefit from using your product?”

If the answer to that is yes, then you have successfully boosted your chances to realize your presentation’s call-to-action.

Harley sums it up best by saying, “If you can passionately tell me those 7 stories while building a rapport with me where I eventually become an investor, we can jump over obstacles together. In addition to being a source of funds, I am a member of a terrific network of successful colleagues who are willing to assist you in your entrepreneurial effort. Our knowledge is both deep and wide, crossing industries, technologies, markets, and distribution channels. Thus, I encourage you to make the upfront effort to tell me your story. We can be successful together!”

 

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