business plan for angel investors

Business Plan Template for Angel Investors

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Looking to secure funding from angel investors for your brilliant business idea? Look no further than ClickUp's Business Plan Template for Angel Investors! This template is specifically designed to help entrepreneurs like you outline your company's vision, market opportunity, financial projections, and growth strategy in a clear and compelling way. With this template, you can create a comprehensive and professional business plan that will attract potential angel investors and give you the best chance of securing the funding you need to bring your vision to life. Don't miss out on this opportunity to take your business to the next level—get started with ClickUp's Business Plan Template today!

Business Plan Template for Angel Investors Benefits

When using the Business Plan Template for Angel Investors, entrepreneurs can enjoy a range of benefits that will help them secure the funding they need:

Streamline the pitching process by providing a clear and concise overview of your business
Showcase your company's vision, demonstrating your passion and commitment to potential investors
Present a compelling market opportunity, highlighting the potential for growth and profitability
Provide detailed financial projections, giving investors confidence in the potential return on their investment
Outline a strategic growth plan, showing investors how you plan to scale and achieve success
Increase your chances of securing funding from angel investors and turning your entrepreneurial dreams into a reality.

Main Elements of Angel Investors Business Plan Template

When it comes to attracting angel investors and securing funding for your business, having a well-structured and comprehensive business plan is crucial. ClickUp’s Business Plan Template for Angel Investors includes:

Custom Statuses: Keep track of the progress of each section of your business plan with statuses like Complete, In Progress, Needs Revision, and To Do.
Custom Fields: Add important details to your business plan, such as references, approval status, and section classification, using custom fields like Reference, Approved, and Section.
Custom Views: Access different perspectives of your business plan with views like Topics, Status, Timeline, Business Plan, and Getting Started Guide, making it easy to navigate and share your plan with potential investors.
Collaboration Tools: Collaborate with your team in real-time, assign tasks, set due dates, and leave comments to ensure everyone is aligned and working towards the same goal.
Document Management: Use ClickUp’s Docs feature to write and store your business plan, making it easy to update and share with investors.

How To Use Business Plan Template for Angel Investors

If you're seeking investment from angel investors, having a well-crafted business plan is crucial. Follow these steps to effectively use the Business Plan Template for Angel Investors in ClickUp:

1. Define your business concept

Start by clearly articulating your business concept and value proposition. Explain what problem your product or service solves, who your target market is, and how your offering is unique. This section should provide a clear understanding of your business and its potential for success.

Use the Docs feature in ClickUp to outline your business concept and value proposition in detail.

2. Conduct market research

Angel investors want to see that you've thoroughly researched your target market and industry. Identify your target audience, analyze your competition, and assess market trends. Provide data-backed insights that demonstrate a solid understanding of the market landscape.

Use the Table view in ClickUp to organize and analyze your market research data effectively.

3. Develop a comprehensive financial plan

Include a detailed financial plan that outlines your revenue projections, expenses, and funding requirements. Show how you plan to monetize your business and achieve profitability. It's also essential to highlight your assumptions and provide a clear roadmap for financial growth.

Create custom fields in ClickUp to track your financial projections and milestones.

4. Showcase your team and expertise

Angel investors are not just investing in your business idea; they are also investing in you and your team. Highlight the qualifications and experience of your key team members, emphasizing how their skills align with the needs of your business. Include any advisors or mentors who can provide additional credibility.

Use the Dashboards feature in ClickUp to showcase your team's expertise and track their contributions.

5. Craft a compelling executive summary

The executive summary is the first section investors will read, so it needs to be attention-grabbing and concise. Summarize the key points of your business plan, highlighting the most compelling aspects. Make sure to include crucial details such as your unique selling proposition, financial projections, and funding requirements.

Create an Email in ClickUp to send your executive summary to potential angel investors, making a strong first impression.

By following these steps and leveraging the Business Plan Template for Angel Investors in ClickUp, you'll be well on your way to attracting the attention and investment you need to turn your business dreams into a reality.

Get Started with ClickUp’s Business Plan Template for Angel Investors

Entrepreneurs seeking investment from angel investors can use the ClickUp Business Plan Template to create a comprehensive and compelling business plan that highlights their company's potential.

First, hit "Add Template" to sign up for ClickUp and add the template to your Workspace. Make sure you designate which Space or location in your Workspace you’d like this template applied.

Next, invite relevant members or guests to your Workspace to start collaborating.

Now you can take advantage of the full potential of this template to create an impressive business plan:

Use the Topics View to organize your business plan into different sections, such as Executive Summary, Market Analysis, Financial Projections, and Growth Strategy.
The Status View will help you track the progress of each section, with statuses like Complete, In Progress, Needs Revision, and To Do.
Utilize the Timeline View to set deadlines and milestones for each section, ensuring that you stay on track.
The Business Plan View provides a comprehensive overview of your entire plan, allowing you to review and make necessary adjustments.
Use the Getting Started Guide View to access helpful tips and resources to assist you in creating a successful business plan.
Customize the Reference, Approved, and Section custom fields to add additional information and track important details.
Collaborate with team members and stakeholders to gather feedback and make revisions to your business plan.
Monitor and analyze your progress to ensure that your business plan is compelling and ready to attract angel investors.
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Angel Investors: The Ultimate Angel Funding Guide

Written by Dave Lavinsky

This guide to angel investors results from 20+ years of Growthink helping entrepreneurs and businesses raise angel funding. Over this time, we have helped pitch thousands of angel investors, hosted angel investor gatherings, and even had many angel investors as clients.

Below you’ll learn everything you need to know about angel investors and how to get them to fund your company.

Check out Angel Investor Formula

Here’s an outline of this angel funding guide:

What are Angel Investors?
What Does an Angel Investor Do?

How Do Angel Investors Work?

How do angels differ from venture capitalists (vcs), the value that angel investors offer, advantages and disadvantages of angel investments, what angel investors look like, why angel investors invest, what sectors angels invest in, what angel investors look for in a company, the return on investment that angel investors require, step-by-step action plan for raising capital from angel investors.

Angel Investing Groups List By State

What Are Angel Investors ?

The term “angel investor” is officially defined as a private investor who offers financial backing to an entrepreneurial venture.

When several private investors form an organization to collectively fund ventures, they are known as an “angel investor group.”

The act of providing financial backing is known as “angel investing.”

The amount of angel financing is significant. According to the Center for Venture Research at the University of New Hampshire, 66,110 ventures were funded by angel investors totaling $23.1 billion last year.

This compares to only 8,948 companies that venture capital firms funded, although VCs invested $130.9 billion in these firms.

Part of why angel investing is so prevalent is that there are numerous stories of companies who raised angel capital in their nascent stages and then achieved massive success. Among many others, companies that raised angel investments include Google, Amazon.com, Apple, The Body Shop, Kinko’s, Starbucks, Digg, and LinkedIn.

What Does An Angel Investor Do?

So what does an angel investor actually do for a business?

An angel investor can provide a number of resources to a company, but typically they will:

Help the company grow and scale by bringing important industry connections and expertise
Serve as a sounding board for the company’s ideas and strategies
Help the company network to other investors and business people
Bring publicity to a new venture by writing articles, attending conferences, and meeting with the media
Invest in a small equity position that serves as an initial financial investment into a promising new venture

Keep in mind, most angels are not professional investors. They do not make a major effort to regularly raise capital from accredited investors, but rather focus on their personal investments in the companies of like-minded people who are trying to build something great.

In angel investing, a small investment is made into a business that has yet to begin operating or has a product built. An angel, or “seed” investor, will typically invest from $25,000 to $500,000 in early-stage businesses.

In exchange for the investment, the angel often receives convertible debt or preferred stock in the company. The terms of this agreement are negotiated between the startup and the investor.

The idea behind convertible debt is that it gives the start-up more time to achieve profitability or a liquidity event before the angel converts the debt into equity. This can be helpful for business startups that may not have immediate plans to go public or be acquired.

Preferred stock, meanwhile, typically comes with voting rights and other protections that help ensure the angel is first in line to recover their investment if the company fails.

In return for the angel backing, entrepreneurs will give up anywhere from 1-10% of their business. Most angels never expect to receive a payout on their original investment because they prefer a long-term growth strategy which leads to an exit that is appropriate for all parties involved.


	Startups, Small Businesses	Existing Businesses with Proven Track Record
	$25,000 – $500,000	$2M – $10M
	Convertible Debt or Preferred Stock	Stake of the Company – Usually 30-50%
	3 – 6 Months	4 – 6 Months
	Not Professional Investors – Usually Business Owners or Retired Executives	Professional Investors
	Invest Their Own Money	Invest Other’s Money
	Maybe	Yes
	Usually 10-35%	Goal is 10X return

Angel investors provide value beyond the actual dollars they invest in your company. Because angel investors are usually successful business owners and executives with vast networks, they:

Have contacts in their networks that can help your business
Provide advice in running your business
Can refer contacts for additional sources of capital

: Angels typically invest sooner than venture capitalists, who often have a long due diligence process. : Angels typically offer more than just money. They can provide advice, valuable contacts, and mentorship.

: For example, they may want a seat on your Board of Directors or to be able to veto certain decisions. : Angels often want a larger ownership stake in the company than venture capitalists. : As mentioned, the typical venture capitalist invests at least $2 million in your company. While angels can invest anywhere from $25,000 to hundreds of thousands or even millions of dollars into a single company, they may not be able to offer as much money as VCs do.

The Center for Venture Research at the University of New Hampshire, which researches angel investments, has found that the average angel investor is 47 years old with an annual income of $90,000, a net worth of $750,000, is college-educated, has been self-employed, and invests $37,000 per venture.

While the Small Business Administration and other organizations estimate the number of active angel investors in the United States to be 250,000, the number of potential angel investors is much greater. According to TNS Financial Services, 9.3 million households in the United States have a net worth exceeding 1 million dollars. Three million of these households, according to Merrill Lynch & Co. and Capgemini Group, have investable assets of at least $1 million, excluding their primary homes.

We consider this 9.3 million figure to be the best estimate of the number of potential angel investors in the United States. The vast majority of these individuals are “latent angels,” defined as individuals who have the necessary net worth but have not made an investment. These individuals are often the best potential investors in a venture since they have the funds but aren’t bombarded with possible deals (unlike angel groups and venture capitalists constantly bombarded).

Most active angel investors are current or former entrepreneurs, successful executives, or otherwise wealthy individuals. Note that sometimes a venture capitalist will see a deal that is not a good fit for their venture capital funds but which they like, and thus may invest personally as an angel investor. Because, as discussed earlier, angels are often individuals with extensive business experience who have operated and owned successful businesses of their own, they can often provide more value to your business than just the money they invest.

Angel investors usually invest in privately-held companies for the following reasons:

They think they can get a solid return on investment. Investing at the earliest stages for a company that eventually goes big can earn the investor 100X their money back or more.

According to the Center for Venture Research, angel investors expect an average 26% annual return at the time they invest, and they believe that about one-third of their total investments are likely to result in a substantial capital loss.

They know, like, and trust the entrepreneur. Like with friends and family investments, sometimes angels know and trust the entrepreneurs and want to help them succeed.

They feel they can add real value: many angels have lots of relevant experience to help the companies they fund, from experience hiring staff to connections with key potential customers or suppliers. If angels can see their involvement adding a lot of value to the company, they might be very interested in investing.

Sometimes, the angel wants or likes the action. Simply put, investing is exciting. It is generally a higher risk/higher reward version of the public stock markets requiring a more entrepreneurial analysis which is highly intriguing.

Be sure to keep the above five motivations in mind as they can help you secure angel funding for your business.

industries common to most angel investors

There are over 9 million latent angel investors, most of which have never been asked to invest in a private company.

Angels often invest when “they feel they can add real value” and virtually always only invest when they understand the business. Because retail businesses are frequented by angel investors, they tend to understand the businesses and believe they can add value.

Finally, note that with retail establishments like restaurants, there is also the ego element that the angel can go to and tell friends that it is partially “their” restaurant. This ego factor also holds true with other types of investments.

Angels invest in all sectors, but the ones listed above are the most prominent.

To consider investing, angel investors must believe that the company has great potential to achieve a liquidity event and one that enables them to earn a significant return on their initial investment. The following factors imply that a company has this potential:

The first criterion is the scale or the potential for the company to achieve significant annual revenues. If a company expects to raise venture capital after the angel round, it must have the potential to earn annual revenues of $50 million to $100 million within five years.

Conversely, an angel investor, when no follow-on capital is required, might be willing to invest in a restaurant or website that has the potential to generate hundreds of thousands or a few million dollars as long as a clear path has been laid out regarding how they could get a sizable return on their investment.

The second criterion is the barriers to entry. Barriers to entry are those things that make it difficult for another firm to compete against you, such as patents or proprietary technology, a unique location, and long-term customer contracts.

The third criterion is having a solid management team with relevant experience and successes under their belts. The angels must believe in and be comfortable with both the founders and the critical operating personnel of the company.

The fourth criterion is that angel investors need to feel confident of your exit strategy, mainly that the chances are good of eventually having another firm purchase you or your firm going public. It is through the exit strategy that these investors profit from their investment in you.

Another important criterion, while not necessarily tied to liquidity potential, is that angel investors tend to only invest in local companies. Angel investors often like to invest in companies that are close by so that they can visit them often and participate in Board and other meetings. In fact, according to the Center for Venture Research, 70% of investments are made within 50 miles of the investor’s home or office.

Finally, angel investors will only invest when the price is right. If companies price their equity too high, then angels may not have the potential to reap significant returns and thus may not invest.

Angel investors typically provide more capital than friends and family but less than venture capital firms. Specifically, angel financing amounts typically range from $25,000 to $500,000. For this money, angel investors usually gain 10% to 35% of the equity of the company.

Angel investors generally expect to earn returns of approximately 30% from their private company portfolio. Note, however, that you cannot simply offer an angel investor the chance to make a 30% average return on investment (ROI). Why? Because most investments fail to reap any ROI. As such, if half of their investments fail, they would need to earn 60% returns on those that succeeded to realize a 30% average return.

The action plan for raising capital from angel funders and groups is as follows:

Step 1: Preparation

There are several things you need to do to prepare yourself and your company to raise capital from angel investors:

Develop a Solid Business Plan

The plan for your business details the vision of your company and your action plan for achieving it. As such, it is a critical document for angel investors to review.

This business plan template and guide provides a section-by-section overview of how to expertly complete your plan.

Develop Your Private Placement Memorandum

Private Placement Memorandums or PPMs are documents that are provided to potential investors for a private placement of securities.

Specifically, the PPM is a document that includes your business plan plus the following information:

Summary of Subscription procedures
How the offering works; e.g., payments; state disclosures, etc.
Summary of the Offering
Company overview, # shares, minimum investment, use of proceeds, etc.
Risk factors
Use of proceeds
Management compensation
Principal shareholders and capitalization table
Subscription Agreement
Actual subscription form that investors sign

Private placement transactions are exempt from registration under the Securities Act of 1933 in accordance with one or more statutory exemptions, as discussed in “Regulation D and Other Exemptions from Registration.” The question naturally arises as to which firms need to prepare a PPM and which don’t. The answer to this question continues to change with changing federal regulations, and thus our suggestion is to ask your attorney for advice on this matter.

If you need to create a PPM, use this private placement memorandum template .

Prepare for Due Diligence

Before closing a deal, angel investors (and particularly angel investor groups) will complete what’s known as due diligence, which is a deeper investigation into the details of the business.

The shortlist of the key elements that may need to be prepared include the following:

Background of the company
Background of management
The Company’s business plan
Financials of the company inception (if applicable)
Management discussion of company performance (if applicable)
A capitalization table (list of current equity holders)
Employment agreements
Purchase or sale agreements
Previous letters of intent

Make sure you prepare each of these materials beforehand to respond when these items are requested quickly.

Hire the Appropriate Counsel

Your company should be prepared with appropriate counsel, such as a lawyer and an accountant. Regarding legal, legal counsel will be needed to prepare and review your private placement memorandum (if appropriate) and negotiate and finalize the paperwork for the financing transaction(s).

Set Realistic Investment Terms

When you work with venture capital firms and often angel investment groups, they will set the terms of investment (e.g., the price per share, clauses to the financing, etc.)

With individual angels, you and your company will typically set the investment terms, although the angel may negotiate these terms with you.

In developing your investment terms, make sure that the terms are realistic. Keep in mind that the angel investor often takes a substantial amount of risk in an unproven company and should be amply rewarded if the company succeeds. Setting your investment terms too high could prevent you from raising the funds you need to grow your venture.

Step 2: How To Find Angel Investors

When searching for angel investors, you can either search for angel investment groups or individual angels.

How to Find Angel Investment Groups

You can find angel investment groups at the end of this article. Note that angel groups invest geographically, so you need to find a group within 100 to 200 miles maximum of your company headquarters.

It is essential to understand that while angel investment fund groups are a viable funding option, they get tons of potential deals and are thus highly selective. The better bet is often to network and, otherwise, find individual angels (typically business owners and retired industry executives) who know your business and have the capital to invest.

How to Find Individual Angel Investors

Individual angels can be found via:

Networking at events and through multiple degrees of separation.
Focused Prospecting

Below is more information about these sources so you can create an angel investors list to target.

1. Referrals

The ideal way to be introduced to an angel investor is through a referral by a mutual acquaintance. Talk to your friends, family members, and service professionals such as your accountant, lawyer, or business advisor and see if they can either invest in your small business or refer you to an angel who can.

Note that once you meet an angel, if they say “no” to investing in your business, don’t stop there. Angel investors generally know other angel investors, so always ask for referrals. These are often the highest quality and most fruitful referrals.

2. Networking

If you can’t find referrals to angels from your current network, expand your network.

Networking through attending events and constantly expanding your network by asking for more introductions from your existing contacts works exceptionally well. It does take time and diligence, so you must stick with it.

Here’s a quick lesson regarding how Google raised its angel round of capital.

Founder’s Page and Brin told their ideas to others in hopes that they would get great advice and connections. And sure enough, it worked. Page and Brin discussed their concept with their computer science professor David R. Cheriton. Cheriton then introduced them to his friend Andy Bechtolsheim.

Bechtolsheim then wrote Google a check for $100,000.

And then, Google raised more money from friends and family.

And through their rapidly growing network of investors and advisors, they met and received angel investments from Ram Shriram, a former Netscape executive, and Ron Conway and Bob Bozeman, partners in Angel Investors.

The “and so on and so on” momentum had begun, and that, coupled with continued success with the development and launch of Google.com, resulted in millions of additional dollars being invested in Google.

If you already know some quality people, speak to them and then refer you to other people. If you feel you don’t have highly networked people that you know, go out and find them.

Go to industry events and conferences and meet people. Befriend them and follow up with them. Then get them to open up their networks to you. And/or meet them on professional networking sites like LinkedIn, Spoke, or Facebook. And then, promote the story of your company to your newfound contacts and prove to them that investing in you and your dream will provide them with significant financial returns.

3. Focused Prospecting

With regards to prospecting for angel investors, consider the statistics mentioned earlier in this report:

According to TNS Financial Services, there are 9.3 million households in the United States with a net worth exceeding 1 million dollars.

Three million of these households, according to Merrill Lynch & Co. and Capgemini Group, have investable assets of at least $1 million, excluding their primary homes

As such, there are up to 9.3 million potential angels for your venture.

Most of these investors are either current or retired executives or business owners. You just need to find them.

Retired Executives

One way to accomplish this is by seeking out retired industry executives online. You can find the names of retired industry executives and often what they are now doing via searches on Google.

For example, if you were seeking angel investors for an aviation company, doing Google searches on “retired Boeing executive” and “former Boeing executive” will produce names of potential business angels.

Likewise, you can find the names of executives and Board members of local companies, contact them and see if they are interested in investing in your company.

Business Owners

Business owners are the best angel investors. They generally have capital, and they can often provide great advice regarding starting and growing your company.

In addition, business owners are easy to find. You can pick up the phone book or drive around to find businesses in your area that seem to be successful. And then strike up a conversation with the business owner. It really is that simple.

Another way to find business owners along with their contact information is to purchase lists from organizations such as InfoUSA and Dun & Bradstreet. These firms allow you to create highly-focused lists. For example, you can buy the contact names of business owners within specific industries, with certain annual revenues, and within particular zip code ranges.

As a result, you can quickly, easily, and cost-effectively create highly-targeted angel funder contact lists. Then, you can call these prospects and use both online and offline networking to get introductions to them.

Step 3: How To Effectively Pitch To An Angel Investor

Once you find angels and angel groups you need to pitch them on one or more of these three important things:

Investing money in your company
Investing time in your company as an executive or advisor
Introducing you to other angels since angels nearly always know lots of other angels

If you are pitching to an angel group, there is generally a formal process in which you first submit your business plan and then present your pitch deck to the group. Whether you pitch to an angel group or individual angel investors, you should always use a slide presentation/pitch deck. It allows you to control the conversation and ensure that all of your key points get mentioned.

Step 4: Closing the Deal

As discussed earlier, be careful not to negotiate complex financing terms nor set valuations too high, or it will hurt your chances of raising additional rounds of capital.

Likewise, it is vital to keep this in mind – you want your angel investors to earn a great reward from investing in your company. They are taking a considerable risk on you and your venture and should be rewarded.

Also, remember that “closing the deal” may be getting referrals to other angels and not a cash transaction. Be thankful for these referrals, as referrals are the root of most deals.

Before closing a deal, individual angels (and particularly angel groups) will complete what’s known as due diligence, which is a deeper investigation into the details of the business. Preparing for this phase beforehand will help speed this process.

Angel Investing Groups List

Below are the nearly 100 US-based angel investor groups sorted by state.

Jump To Your State:

Arizona Technology Investor Forum Tempe, AZ

Angels’ Forum Palo Alto, CA

Band of Angels Menlo Park, CA

Keiretsu Forum – Orange County Orange County, CA

North Bay Angels North Bay, CA

Sand Hill Angels LLC Menlo Park, CA

TechCoast Angels Los Angeles, CA

Angel Investor Forum East Hartford, CT

Connecticut Angel Guild Fairfield, CT

Emergent Growth Fund Gainesville, FL

New World Angels Boca Raton, FL

Atlanta Technology Angels Atlanta, GA

Seraph Group Atlanta, GA

Hawaii Angels Honolulu, HI

Cornerstone Angels Northbrook, IL

Hyde Park Angel Network Chicago, IL

Stateline Angels Rockford, IL

Irish Angels Notre Dame, IN

Women’s Capital Connection Lenexa, KS

Mid-America Angels Lenexa, KS

Midwest Venture Alliance Wichita, KS

Bluegrass Angels Lexington, KY

Boston Harbor Angels Boston, MA Bay Angels Cape Cod, MA

Beacon Angels Boston, MA

Boynton Angels Worcester, MA

Golden Seeds Boston, MA

HubAngels Brookline, MA

Launchpad Venture Group Wellesley, MA

River Valley Investors Springfield, MA

Walnut Venture Associates Wellesley Hills, MA

Capital Access Network (Dingman Center of Entrepreneurship) College Park, MD

ECS Angels Bar Harbor, ME

Maine Angels Portland, ME

BlueWater Angels Midland, MI

Great Lakes Angels Rochester, MI

Grand Angels Grand Rapids, MI

RAIN Source Capital St. Paul, MN

Centennial Investors Columbia, MO

St. Louis Arch Angels St. Louis, MO

Frontier Angel Fund Kalispell, MT

Piedmont Angel Network Greensboro, NC

Nebraska Angels Inc Lincoln, NE

eCoast Angels Portsmouth, NH

Jumpstart New Jersey Angel Network Mt Laurel, NJ

New Mexico Angels Inc Albuquerque, NM

Sierra Angels Incline Village, NV

Golden Seeds New York, NY

New York Angels New York, NY

Rochester Angel Network Rochester, NY

Seed Capital Fund of CNY Syracuse, NY

Tech Valley Angel Network Albany, NY

North Coast Angel Fund Cleveland, OH

Ohio TechAngels Columbus, OH

BlueTree Allied Angels Pittsburgh, PA

Delaware Crossing Investor Group Doylestown, PA

Robin Hood Ventures Wayne, PA

Mid-Atlantic Angel Group Fund I Philadelphia, PA

Cherrystone Angel Group Providence, RI

Charleston Angel Partners Charleston, SC

Nashville Capital Network Nashville, TN

North Texas Angel Network Fort Worth, TX

Houston Angel Network Houston, TX

Active Angel Investors Vienna, VA

New Dominion Angels Warrenton, VA

D’Arch Angels Vienna, VA

Virginia Active Angel Network Charlottesville, VA

North Country Angels Vermont, VT

Puget Sound Venture Club Bellevue, WA

Alliance of Angels Seattle, WA

Silicon Pastures Milwaukee, WI

Wisconsin Investment Partners Madison, WI

How to Fund Your Business With Angel Investors Angel investors are individuals who use their own money to back entrepreneurs they believe in.

By Eric Butow Edited by Dan Bova Oct 27, 2023

Key Takeaways

Angel investors invest their own money.
Angel investors tend to have a people-first philosophy when choosing which businesses to back.
There are many digital networks that connect entrepreneurs with angels.
Angels tend to start with small investments and add as they see progress.

Opinions expressed by Entrepreneur contributors are their own.

This is part 7 / 11 of Write Your Business Plan: Section 2: Putting Your Business Plan to Work series.

If you are having trouble getting funding for your venture under the right terms, or under any terms at all, you'll be glad to know about the existence of angels in the investment world. Angels are individuals who invest their own money, as opposed to institutions or professional money managers, who invest other people's money. Many angels are well-off professionals, such as doctors and lawyers. Some are retired but have tremendous expertise to share in a specific field. Others are successful small business owners who have made a bundle with their own entrepreneurial efforts and are now interested in letting their money work for them in someone else's venture.

Because angels invest their own money, you might think they are the most discriminating, difficult-to-please investors. In fact, they are as a rule much more willing to take a flier on a risky, unproven idea than are professional investors and lenders.

Related: 6 Ways Angels and VCs Think Differently

That's not to say that they won't do their due diligence, but angels often take a personal interest in a project and may simply believe strongly in the person behind it…that's you! They are usually swayed more by personal concerns than by financial ones.

Note: [Due diligence refers to all the things an investor should do to check out an investment. It has a legal definition when applied to the responsibilities of financial professionals, such as stockbrokers. In general, it includes such things as requiring audited financial statements and checking warehouses for claimed inventory stocks.]

Finding Angel Investors

While angel investors used to be located primarily by word of mouth, they are easier to find in the electronic age. The Angel Investment Network helps angel investors and small businesses seeking capital meet online.

The Angel Capital Association is another place to learn about angels and seek out an angel network—a local group of angel investors in your area. Visit them at www.angelcapitalassociation.org .

Keep in mind that angels are, above all else, unconventional. Many have little training in evaluating business ideas. If twenty angels turn you down, it doesn't mean a thing. Until you've gone through the last name in your Rolodex, you still have a chance of landing an angel backer.

Related: 7 Important Differences Between Angels And VCs You Need To Know

Tim Berry describes the path to finding the right angel in his article " How to Land Funding From Angel Investors ," writing:

Consider Harold Lacy's "six degrees of separation" method. Your angel might be somebody you know, recommended by somebody you know, or a local investment club, business person, perhaps even a local development agency.

Angel investors often focus on local markets, specific industries, and affinities such as college or university alumni. Your search should include looking for angel groups related to the college or university from which you graduated; your town, or state; and the industry you're in.

Use web search. Search for "angel investors in [your area]" or "angel investors [your type of business]" or "angel investors [your college or university] alumni."

Related: Glamour of VC Funding VS Patronage Of Angel Nurturing

What Angels Investors Are Looking For

You may also fit angel guidelines if you don't need a whole lot of money. Institutional venture capitalists can, by pooling the funds of several different groups, raise vast sums. It's not unheard of for venture capitalists to invest nine-figure sums—more than $100 million—in relatively new, unproven ventures. Even Bill Gates or Warren Buffett is unlikely to feel comfortable sinking that kind of money into anything uncertain. Your angels' capacity will vary, of course, but angels tend to start small and see how you are doing before adding to the pot. One of the nicest things about the angel networks that have formed in recent years is that they can pool their resources, giving you a few angel investors in one place at one time. This also makes it easier when you are preparing to meet with angel investors. Rather than meeting one at a time, you can meet several in one angel network or even a couple who will spread the word among their partners so that they can decide as a group.

Related: 3 Things That Make Angel Investors Want To Invest In You

If you're after angels, it's in your interest to guard their interests. Unsophisticated angels may, for instance, give you money without specifying exactly what they are buying, such as percentage of ownership. Such angels can be taken advantage of. But you may want more help someday, and angels tend to talk with each other. So make it legal, make terms clear, and take care of their interests.

Related: Where To Find Angel Investors

More in Write Your Business Plan

Section 1: the foundation of a business plan, section 2: putting your business plan to work, section 3: selling your product and team, section 4: marketing your business plan, section 5: organizing operations and finances, section 6: getting your business plan to investors.

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How to Write a Convincing Business Plan for Investors

Noah Parsons

9 min. read

Updated August 1, 2024

Download Now: Free Business Plan Template →

Raising money for your business is a major effort. You need lists of investors to reach out to and you need to be prepared for your investor meetings to increase your chances of getting funded . You need to practice your pitch and be ready to intelligently answer any number of questions about your business. A key to making this entire process much easier is to invest a little time and write a business plan . It’s true — not all investors will ask to see your business plan.

But putting together a business plan will ensure that you’ve considered every aspect of your business and are ready to answer any questions that come up during the fundraising process.

Why do investors want to see a business plan?

The business plan document itself isn’t what’s important to investors. It’s the knowledge that you’ve generated by going through the process that’s important. Having a business plan shows that you’ve done the homework of thinking through how your business will work and what goals you’re trying to achieve.

When you put together a business plan, you have to spend time thinking about things like your target market , your sales, and marketing strategy , the problem you solve for your customers, and who your key competitors are . A business plan provides the structure for thinking through these things and documents your answers so you’re prepared for the inevitable questions investors will ask about your business.

Even if investors never ask to see your business plan, the work you’ve done to prepare it will ensure that you can intelligently answer the questions you’ll get. And, if an investor does ask for your business plan, then you’re prepared and ready to hand it over. After all, nothing could be worse than arriving at an investor meeting and then getting a request for a business plan and not having one ready.

Beyond understanding your business strategy, investors will also want to understand your financial forecasts. They want to know how your business will function from a financial standpoint — what is typically called your “ business model .” They’ll also want to know what it will take for your business to be profitable and where you anticipate spending money to grow the business. A complete financial plan is part of any business plan, so investing a little time here will serve you well.

What do investors want to see in a business plan?

There’s no such thing as a perfect business plan and investors know this. After all, they’ve spent years, and often decades, hearing business pitches, reading business plans, investing in companies, and watching them both succeed and fail. As entrepreneur and investor Steve Blank likes to say, “No business plan survives first contact with a customer.”

If this is true, then why bother writing a business plan at all? What’s the value of planning and why do investors want them if they know the plan will shortly be outdated?

The secret is that it’s the planning process, not the final plan, that’s valuable. Investors want to know that you’ve thought about your idea, documented your assumptions, and are on track to validate those assumptions so that you can remove risk from your business.

So what do investors want to see in your business plan? Beyond the typical sections , here are the most important things that investors want to see in your plan.

A vision for the future

Investors, particularly those investing in early-stage startups, want to understand your vision . Where do you see your company going in the future? Who will your customers be and what problems will you solve for them? Your vision may take years to execute — and it’s likely that the vision will change and evolve over time — but investors want to know that you’re thinking beyond tomorrow and into the future.

Product/market fit and traction

Investors want more than just an idea. They want evidence that you are solving a problem for customers. Your customers have to want what you are selling for you to build a successful business and your business plan needs to describe the evidence that you’ve found that proves that you’ll be able to sell your products and services to customers. If you have “traction” in the form of early sales and customers, that’s even better.

Funding needed and use of funds

When you’re pitching investors, you need to know how much you’re asking for. Your financial forecast should help you figure this out. You’ll want to raise enough money to cover planned expenses and cash flow requirements plus some additional funding as a safety net. In addition, you’ll want to specify exactly how you plan on using your investment . In a business plan, this section is often called “sources and uses of investment.”

A strong management team

A good idea is really only a small part of the equation for a successful business. In fact, lots of people have good business ideas — it’s the people that can execute well that generally succeed. Investors will pay a lot of attention to the section of your plan where you talk about your management team because they want to know that you can transform your idea into a successful business. If you have gaps and still need to hire key employees, that’s OK. Communicating that you understand what your needs are is the most important thing.

An exit strategy

When investors give you money to start and grow your business, they are looking to eventually make a return on their investment. This could happen by eventually selling your business to a larger company or even by going public. One way or another, investors will want to know your thoughts about an eventual exit strategy for your business.

What documents do investors want to see?

Even if investors never ask for a detailed business plan, your business planning process should produce a few key documents that investors will want to see. Here’s what you need to be prepared to pitch investors:

Cover letter

These days, a lot of fundraising outreach is done over email and you’ll need a concise cover letter that sparks investor interest. Your cover letter needs to be very brief, but describe the problem you’re solving for your target market.

Great cover letters are sometimes in a “story” format that hooks readers with a real-world, relatable example of the problems your customers face and how our product or service The goal of the cover letter isn’t to explain every aspect of your business. It’s just to spark interest and get a meeting with an investor where you’ll have more time to actually pitch your business. Keep your cover letter brief, engaging, and to the point.

If you get an investor meeting, you’ll almost certainly need a pitch deck to present your idea in more detail and showcase your business idea. Your pitch deck will cover the problem you’re solving, your solution, your target market, and key market trends.

Further Reading: What to include in your pitch deck

Executive summary and/or one-page plan

You might not get a meeting right away. Your cover letter may generate a request for additional information and this is where a solid executive summary or one-page business plan comes in handy. This document, while still short, is more detailed than your cover letter and explains a bit more about your business in a page or two.

Read more about what goes into a great executive summary and how to build a lone-page business plan.

Financial forecasts

Investors will inevitably want to see your financial forecasts. You’ll need a sales forecast, expense budget , cash flow forecast , profit and loss, and balance sheet . If you have historical results, you should plan on sharing those too as well as any other key metrics about your business. Investors will always look deep under the hood of your business, so be prepared to share all the details of how your business will work from a financial perspective.

What to include in your investor business plan

When you put together a detailed business plan for investors, you’ll follow a fairly standard format. To get started, I recommend you download our free business plan template . It’s lender-approved and, of course, can be customized to fit your business needs.

Remember: your business plan isn’t about the plan document that you create — it’s about the planning process that helps you think through and develop your business strategy. Here’s what most investor business plans will include:

Executive Summary

Usually written last, your executive summary is an overview of your business. As I mentioned earlier, you might use the executive summary as a stand-alone document to provide investors more detail about your business in a concise form. Read our guide on executive summaries here .

Opportunity

The opportunity section of your plan covers the problem you are solving, what your solution is, and highlights any data you have to prove that people will spend money on what you’re offering. If you have customer validation in any form, this is where you highlight that information.

Market Analysis

Describe what your target market is and key trends that are occurring in this market . Is the market growing? Are buying patterns changing? How is your business positioned to take advantage of these changes? Be sure to spend some time discussing your competition and how your target market solves their problems today and how your solution is superior.

Marketing & Sales Plan

Most businesses need to figure out how to get the word out and attract customers. Your business plan should include a marketing plan that describes how you’re going to reach your target market and any key marketing initiatives that you’re going to undertake. You should also spend time describing your sales plan, especially if your sales process takes time to close customers.

Milestones / Roadmap

Outline key milestones you hope to achieve and when you plan on achieving them. This section should cover key dates for product development, key partnerships you need to create, and any other important goals you plan on achieving.

Company & Management

Here’s where you describe the nuts and bolts of your business. How is your organization structured? Who is on your team and what are their backgrounds? Are there any important positions that you still need to recruit for?

Financial Plan

As I mentioned, you’ll need to create a profit and loss, cash flow, and balance sheet forecast. Your financial plan should be optimistic, yet realistic. This is a tough balance and your forecast is certain to be wrong, but you need to document your assumptions and plans for the business.

Finally, you can include an appendix for any key additional information you want to share. Product diagrams, additional details on how you deliver your service, or additional research can all be included.

What comes next?

Writing a business plan for investors is really about preparing you to pitch your business . It’s quite likely that you’ll never get asked for the actual business plan document. But, the process will prepare you better than anything else to answer any questions investors may have.

Not sure how much money you need to raise?

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

Understand how to negotiate an investment deal

1 Min. Read

5 Tips on Negotiating an Investment Deal

Be aware of what investors want to see from a business

8 Min. Read

What Do Investors Really Want From a Business?

4 Min. Read

30 Questions Angel Investors Will Ask You

Learn how to find alignment with investors

5 Min. Read

Make Sure You See Eye to Eye With Your Investors

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How to Write a Business Plan For Investors (That They Will Love)

The Startups Team

A good business plan does more than just inform readers about what your company does, how you earn money, or what you want to do. It persuades the reader that your company is awesome, gets them excited about the opportunity to get involved, and makes them want to help you succeed.

But how do you write a good business plan for investors? You probably didn’t go to business school and if you’re a first-time founder, it can be really hard to figure out how to do something so technical. But don’t worry! This guide will walk you through how to write a business plan for investors, will help you answer the most important questions about your business, and will show you the best ways to illustrate them. We’ve also thrown in some additional resources you can turn to for help.

And if that’s still not enough, Bizplan is giving Startups.com readers 50 percent off their first month of business planning services. Check it out here .

The Big Picture

There are 14 important sections of a business plan. But that is by no means an excuse to write out your entire life story on paper. The average business plan should be around 15 pages — no more than 20.

In the past, the average business plan was anywhere from 40 to 100 pages, and guess what they found out? No one was reading all of that. So don’t let important information about your company get lost in a jumble of words. Investors look for founders who can provide the most value in the least amount of time, and your business plan is a great indication of that ability.

The Big Questions

By the time readers are done reading your business plan, they should have a clear understanding of the following: Why (Why this? Why now? Why you? Why them?) and how (How will you make money? How will you get customers? How will you grow your business?).

These questions should be answered throughout your business plan, and should prove to those reading it that your company has the right product, market, team, time, and strategy to make them a return on their investment.

So without further adieu, here is a breakdown of writing a business plan for investors:

1. Executive Summary

The Executive Summary is an introduction to the main ideas that you will discuss in the rest of the plan. If an investor read only the Executive Summary and nothing else, you’d want them to be able to walk away with a clear understanding of the main highlights of your business and why it’s exciting.

A good Executive Summary includes quick, one to two sentence overviews of the following information: mission statement, product/service summary, market opportunity summary, traction summary, next steps, and vision statement.

Pro tip: Although the Executive Summary comes first, it is often helpful to write it last because you’ll have worked through everything by then.

2. Investment Opportunity

The Investment Opportunity section is where you tell investors what your goals are, why they are integral in helping you achieve those goals, and what they have to gain from getting involved with your company. This includes:

Your Funding Goal : How much money do you need to move forward
Terms : What will investors get in exchange for their investment?
Use of Funds : How do you plan to use those funds? (Hint: a 6-figure salary for yourself isn’t what they’re looking for here)
Milestones : What will you be able to achieve with their investment?

Again, the most important question to answer here is why: Why should investors want to be a part of your company, and why is now the time for them to get involved? Identify the three to four key factors that make your company a great opportunity and make sure they’re included in this section.

3. Team Overview

This is where you introduce your team and how you’ll work together to bring the business to life. An ideal Team Overview section makes the case not only that your team is the right team for the job, but that you’re the only team for the job.

In order to do this, you need to create a bio for each member of the team. Each team bio should include: the team member’s name; their title and position at the company; their professional background; any special skills they have developed as a result of their past experience; their role and responsibilities at your company; and what makes them uniquely qualified to take that role on.

Pro Tip: This is not the time or place for cheesy fun facts or hobbies. Aim for three to five concise sentences on each team member.

4. Market Opportunity

Before you do a deep dive into what your company does, it’s important to set the stage and provide readers with some insight about why you’re starting this company in the first place. A good market opportunity section addresses two key points: The problem that your product/service solves, and the industry trends that make now the time for your company to succeed.

When writing the “problem” part of this section, consider two questions: What problems do your target customers face that your product/service solves? What annoyances or inconveniences do they face that your company helps to eliminate?

When writing the “trends” section, consider these three questions: What recent emerging trends have you developed your product/service in response to? Are there any new or emerging technologies that make your product/solution possible? Are there any specific brands you can point to that illustrate the demand for products/services like (but not too like) yours?

And to sum it all up, write a conclusion that answer this question: How do the problems customers face and the trends that are happening come together to create the perfect environment for your company to succeed?

5. Company Synopsis

The company synopsis section is where you introduce readers to your company and what you have to offer. This is the easy part: It’s where you get to talk about what you’re doing and why it’s awesome.

Consider these questions if you’re having trouble getting started: What does your company do? How does it solve the problem you’ve previously outlined? What products and services do you offer? How will customers use your product/service? What are the key features? What makes your product/service different from anything currently available?

6. Revenue Model

This is where you answer the age-old question of any business: How does your company make money? Identify all current/initial revenue sources, including pricing, COGS, and margins.

Ask yourself: Why is this revenue model the right fit for your current stage? How does your pricing compare to competitors? Are there additional revenue sources you plan to add down the line? If you haven’t started generating revenue when & how will you “flip the switch”?

7. Traction/Company Milestones

It’s important for investors to see that your business is more than just an idea on a cocktail napkin; it’s an actual, viable business. Traction is a huge part of making that case.

Here are some key categories of traction that signal to readers that your company is making moves.

Product Development : Where are you in the process? Is your product in the market?
Manufacturing/Distribution: Do you have an established partner for production/manufacturing? Distribution?
Early Customers and Revenue : Do you have existing customers? How many? And how fast are you growing? Have you started generating revenue?
Testimonials and Social Proof : Do you have any positive client reviews of your product/service? Any high profile customers or industry experts?
Partnerships : Have you secured partnerships with any established brands?
Intellectual Property : Do you have any patents for the technology behind your company? Is your company name trademarked?
Press Mentions : Has your company been featured by any media outlets? Which ones?

8. Industry Analysis

The industry analysis section provides a bird’s eye view of the industry your company is positioned in, what’s happening in the industry, and where your company stands in relation to your peers. You want readers to walk away from your business plan seeing not only that you’re an expert in your company but that you’re highly knowledgeable about the industry you’re entering into.

Be intentional about the statistics you include in the plan. Include only numbers that really help to illustrate: the size of the opportunity your company is positioned to address; the demand for your solution; the growth of the audience/demand for your product that is already happening; and competitor analysis.

Now that you’ve introduced readers to your industry, it’s time to give them a glimpse into the other companies that are working in the same space, and how your company stacks up. Identify at least three sources of competition for your company and answer the following questions about each one:

Basic Info : Where are they based? What stage of growth are they in?
Traction : How much revenue do they generate? How many customers do they have? Have they received funding?
Similarities and Differences : What are their strengths? How do you plan to neutralize them? What are their weaknesses? How is that an advantage to you?
The Takeaway : What can you learn from your competitors to make your company stronger?

Pro tip: When identifying competitors, it’s important to think outside the box, and look beyond companies that are offering the exact same product or service that you are. A skimpy competitor analysis section doesn’t tell investors that your solution is unrivaled — it tells them that you’re not looking hard enough.

9. Differentiating Factors

The differentiating factors section is where you outline how your product/service is different from others on the market and how those differences will help you to maintain your strategic edge. Ask yourself: What are three to five key differentiators between your company and other solutions out there? How will these advantages translate into a long-term advantage for your company?

10. Target Audience

The target audience section is where you show readers that you know who your audience is, where they are, and what is important to them.

Some questions to help you get started include: Who are the people that your product/service is designed to appeal to? What do you know about customers in this demographic? Does your target audience skew more male or more female? What age range do your target customers fall in? Around how many people are there in this target demographic? Where do your target customers live? How much money do they make? Do they have any particular priorities or concerns when it comes to the products/services they buy?

11. User Acquisition and Marketing Strategy

Now that we know who your customers are, the next question is: How do you plan on getting them?

Ask yourself: How will you get your first customers? Who will you target first? Will you introduce your product in certain key geographic locations? Are there any existing brands that you are planning to partner with? How do you plan to raise awareness for your brand? What forms of media will you use? Why? Do you have a presence on social media? Which platforms do you use and why? Essentially, what is your marketing strategy ?

12. Future Growth and Development

Once you’ve accomplished all the short-term goals, built out your initial product offering, and acquired your first customers — what will you do to grow your business from there?

Ask yourself: Do you have any new products in the pipeline? How will these new products enhance your current offerings? Are you planning to expand into new markets (new cities, new demographic categories)? Can you provide a timeline of when you expect each new development to take place? What metrics or conditions will help you to decide when it’s time to move forward? What are some potential exit strategies for your company down the road? Will you seek acquisition by a larger company? Do you plan to take the company public with an Initial Public Offering?

13. Financial Overview

Financial data is always at the end of the business plan, but that doesn’t mean it’s any less important. In fact, poor financials can rip apart anything you initially had going for you. The charts, tables, and formulas in your financial section show an investor how well you’re doing and what your odds are for continued survival.

The three most important things to include are: cash flow statement, income statement, and your balance sheet. While these three things are related, they measure quite different aspects of a company’s financial health.

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How To Get Angel Investors To Fund Your Business Idea

You are going to change the world with your incredible new business idea. You have drawn all the plans in your head, conducted all the market research, and are sure of an industry takeover. The only thing holding you back is funding. One viable option to secure this is through an angel investor business plan.

An angel investor is a high-net-worth individual who provides capital for a startup, usually in exchange for an equity stake in the company. As a result, they have heard millions of “million-dollar pitches,” and have gone through thousands of business plans claiming to be the ultimate solution to just about every problem imaginable.

A seasoned angel investor knows that ideas on their own are not worth much and that the first major step in determining the viability of any business is the quality of its business plan.

Thankfully, the internet has made information very accessible, and with a quick google search, you can get thousands of templates and information on how to build a “winning” business plan. However, this begs the question: if this information is so easily accessible, why does research show that less than 1% of startups get funded by angel investors?

While a lot of these online articles and templates are quite helpful, most of them come from sources that have no real-life, practical experience with crafting fund-attracting business plans. At Joorney, we have experts with practical startup experience who have produced business plans, pitch decks, and other documents that have helped our clients raise millions in funding and achieve other business goals.

If your business is to stand any chance at getting funding from angel investors, these are some tips you need to incorporate into your business plan today.

The Critical Elements Angel Investors Look For

In every business an angel investor examines, they are looking for crucial qualities that show the company knows what it’s doing, understands the market it’s operating in, and can mitigate potential risks. In particular, investors are looking at a handful of critical elements that show that the business is worth investing in.

When drafting a business plan for angel investors, you must note that the primary objective is to grow their wealth and see a return on investment. If your business plan does not clearly show how your business will make money for the investors, you are setting yourself up for failure.

Your business plan should succinctly indicate your startup’s cash flow and other financials and make clear the return the investor can expect and when. This is an area investors evaluate seriously and spend a lot of time brooding over, so be thorough when planning this.

Purpose & Passion

Obviously, investors want to make money but that’s not the only reason they invest, and they know full well not every investment will succeed. Many angel investors are willing to take chances on projects that have potential but don’t ultimately give a positive rate of return.

According to a report published by Wharton Entrepreneurship, only 40% of angel investors exits in 2017 showed a positive return on investment. What this tells us is that many angel investors look at the passion behind a project before investing in it, not just its profitability potential. If an investor finds a project that resonates with them personally, they’re likely to invest in it and take a risk.

Market Knowledge

Knowing your market is essential in securing funding for your burgeoning business. You should clearly show your angel investors the full potential of the market which your startup plans to engage. This will require you to conduct extensive research and present meaningful insight into your market.

This includes things like the size of the market, the market segments, your product’s niche in that market or industry, the growth prospects that are available in that market, new trends and technologies, and any barriers to entry. Make it clear in your business plan that you fully understand the opportunities as well as the barriers and risks and that you have plans to address them.

Concrete Management Principles

Management can make or break a small business or a startup. This relationship between leadership and success means that investors are always concerned that their funded enterprises have the right management team. Since investors are pouring money into a business, they expect regular reports on the enterprise’s health and growth.

To this end, a well-rounded management team that combines research, sales, accounting, manufacturing, and human resources is what these investors seek out to know all main areas of the business will be tended to correctly.

Traction & Early Success Indicators

One great way to ensure investor attraction is to prove your product can be successful by showing evidence of past achievements. This demonstrates the ability of your business to follow through on its ideas and show them where your business is headed.

While angels often take chances at earlier stages, the majority of investors consider a business with some traction because it minimizes the risk involved. Be sure to give details of all revenue streams as well as any potential deals that have been secured so that they can see the bigger potential of your business.

Opportunity to Interact with the Business

Some investors are hands-off, allowing the company to get on with their business without interference. Others, however, prefer to have a more active hand in how the company operates. This intervention could be a blessing in disguise, especially if the investor is passionate about the project and has experience in similar types of business in the past. Their advice could be crucial to help the company grow and prosper.

Entrepreneurs may want to include how much involvement they expect from their investors within the business plan. This clear statement allows everyone to understand the expectations and roles of the investor.

A Valid Exit Strategy

Before angel investors sign off on an investment, they prefer knowing that they have a viable way to exit the investment when the time comes. If you’re looking for angel investors to fund your enterprise, you have to give them a chronological expectation for when they can reap their rewards. Not giving them a time-frame or criteria under which to exit the investment is a red flag that would drive off many angel investors.

How to Craft a Complete Business Plan

If you cover all of the elements above in your angel investor business plan, you will be well on your way to securing funding. However, you still need to make sure that the business plan is organized structurally and follows a predictable, logical order. While there are variations depending on the business model and other factors, this is the standard format we follow at Joorney:

Objective
Products or Services Offered
Market Analysis
Sales and Marketing Plan
Operations Plan
Structure of the Business
Management Team Background
Financial Overview
SWOT Analysis
Capital Requirements

Developing a Business Plan Angel Investors Will Be Interested In

Joorney has delved into the requirements of business plans and has experience in covering all the critical aspects of business plans for angel investors. As startups and small businesses compete for funding, proper consideration of the crucial elements needed to convince them to invest becomes more prominent.

Hopefully, with the right advice and guides, more companies can tap into the investor funding they need by focusing on the vital factors investors look for before funding a business. Contact us today to help you craft an investor business plan that will attract the attention of angels, or a pitch deck to get your foot in the door.

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What angel investors want to see in a startup’s business plan

How to write a business plan: advice from the experts.

Show off your personality

“Angels are investing in fairly early-stage businesses so the business plan is largely aspirations rather than accomplishments,” says Colin Mason , Professor of Entrepreneurship at the University of Glasgow’s Adam Smith Business School.

“This means that angels are investing in people rather than in the business – i.e. they are betting on the jockey rather the horse.

“A business plan must show the investor’s thinking and vision for the business.”

A business plan is as important as the pitching deck

“It is vital,” says Nick Lyth , CEO of Green Angel Syndicate. “In the first place, it is a description of where the business is aiming to go, and how it intends to get there.

“In the second place, it exposes the quality of the management team, its professionalism, knowledge of its market, and attention to the detail required in order to succeed.”

Keep things concise

“There should be no more than 20 pages,” says Roderick Beer , Managing Director of the UK Business Angels Association.

“Investors read a lot of business plans. If you can’t get across your idea in a clear and concise way in 20 pages then you might have bigger problems.

“You can always use appendices to include more information in supporting evidence.”

Use plain English

“A business plan need to be dry and factual, but it also needs detail to signal deep understanding,” says Professor Mason.

“But if the startup is a technology business then the science has to be understandable to a non-specialist.”

Include the essentials

All business plans need the following sections: an overview; products/services; achievements or traction; route to market; the team; future milestones; financing requirements; financing projections and risk analysis.

“From an investor perspective the most important sections are probably the team, the traction, and the financials,” says Beer.

“Executive summaries in business plans aren’t that important because before an investor gets to the business plan they are more than likely to have looked through the investment deck which is in its own form a summary.”

Be positive, but realistic

“Overpromising is a bad strategy,” says Simon Thorpe , Chair at Cambridge Angels. “You tend to come unstuck very quickly. The timetable is always longer than an entrepreneur thinks.

“The thing we know about projections is that they will be wrong. We don’t want to see ridiculous assumptions, but we want to see an understanding of the metrics of a business.

“It’s important to show off several scenarios for your business. Consider the best, medium and worst case scenarios.”

Show you’re special – but you don’t have to be unique

“Angels are not interested in ‘me too’ businesses,” says Mason. “They want to know what specific problem or ‘pain’ the business is addressing – and they are looking for ‘migraines’ rather than simply 'headaches' that can be solved by an aspirin.

“They want to know what's the competition and what the startup offers that is different from current solutions. But they are sceptical, so claiming uniqueness can be a turn off!”

Show the angels what you have already achieved

“Clear evidence of demand and market penetration are very encouraging,” says Lyth.

“For example, a company recently pitched with a product aimed at the mainstream grocery supermarket sector, and had already secured listings and endorsement from Tesco. This was great for us.”

Research your angels

“I recently had an approach from someone who had done all his homework on me, knew a lot about me and what I did, and that meant I was immediately much more interested,” says Thorpe .

“There was another business proposal that I didn’t like but what piqued my interest was that it was an area of interest to me. So we had a chat and he was able to come back with a proposal more relevant to me.”

Neelam Patel , CEO at MedCity Angels, agrees: “It’s definitely worth researching your audience. What they are interested in, what have they invested in before and how much.

“When in doubt, keep it general and accessible and go into details as and when asked.”

Check if the angel has special interests

As Lyth explains: “Any company approaching Green Angel Syndicate looks foolish if it does not recognise that we specialise in the fight against climate change and global warming. It must take account of this and aim to sell itself to us on the basis of its contribution to that fight.

“It simply looks incompetent and unprofessional otherwise. It discourages belief that it will be able to assess its customers effectively, and run a decent sales campaign.”

Get a second opinion

“A family member can be really helpful for feedback before you show the business plan to an angel,” says Beer.

“An investor needs to be able to understand your business and how you intend to make a success of it and it needs to be easy to understand and easy to read and so testing it on a reasonably intelligent family member is a good way forward.

“Certainly get someone that’s not on the inside of the business to review it because we often see cases where the founder can’t see the wood for the trees.”

Think like an investor

“The best business plans make you want to know more,” says Patel . “They make you wonder: what’s next, and keeps answering the questions popping into your head.

“Being able to anticipate the investor’s next questions is a feature of a good business plan.”

Consider the impact of Covid-19

“Angels are still investing,” says Mason . “But many are preserving their cash for follow-on investments rather than making new investments.

“Covid-19 has altered the sectoral preferences of angels – some are very open to businesses that are addressing opportunities that it has created.”

Thorpe says that the pandemic has not significantly altered his interests. “We’re still investing in the same areas. But the coronavirus has accelerated the adoption of technology, especially in health and education.

“The other big theme is the growth of e-commerce. You don’t have to be an Amazon to be part of it. A lot of businesses out there support the likes of Amazon.” AI and Big Data, he says, are also key focuses for angel investors.

Cambridge Angels has taken on 13 new companies since January 2020.

Raising Angel investment in the current landscape

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Angel Investors: Who They Are, Pros and Cons

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Table of Contents

What is an angel investor?

How does angel investing work, pros and cons of angel investors, should you get an angel investor, how to find an angel investor, alternatives to angel investors.

Angel investors are typically high net worth people who fund startups or early-stage businesses in exchange for stock or ownership in that company. This makes them a good source of funds for newer businesses that want to avoid taking out a small-business loan .

Many angel investors are accredited investors, which is a designation that requires a minimum net worth of $1 million, at least $200,000 in annual individual income or at least $300,000 in annual joint income (see the Securities and Exchange Commission website for details). People who hold a Series 7 license (a broker license), a Series 65 license (an investment advisor license) or a Series 82 license (a private securities offerings license) may also qualify.

Angel investors can be friends, family, members of your professional or social networks, individuals or a team of investors. Angel investors often form “angel groups,” in which they evaluate businesses and invest together, pooling resources to make larger investments. Angel investments can be thousands to millions of dollars, depending on business size and ownership sold.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Angel investors typically want ownership in the company they invest in, making this a form of equity financing . An angel investor may provide capital in exchange for equity (stock in the company) or convertible debt, which is a loan that can be converted to equity at a later date.

For example, a company that's valued at $1 million might sell 20% of its equity, worth $200,000, to an angel investor or an angel group.

Generally, angel investors are interested in high-growth, high-potential startups that can earn them several times their original investment. In other words, the potential rewards need to be substantial enough to outweigh the numerous risks of investing in a startup.

A startup business refers to any business in the early stages of growth, including businesses that haven’t started operating yet. Because most banks want to see at least two years in business before approving a business loan, pre-revenue startups may need to turn to venture capital firms or angel investors for funding.


5.0 /5	4.7 /5	4.5 /5
20.00-50.00%	27.20-99.90%	15.22-45.00%
625	625	660

Advantages of angel investors

Expertise. Angel investors often have industry expertise. They may be entrepreneurs who started a business in your field and can provide advice and coaching to help you succeed.

Connections. Angel investors may have a lot of industry connections. They may be able to introduce you to new customers, financing sources , business partners and other relevant contacts.

Support. Because their investment makes them partial owners of the business, angel investors typically make money only if the business is successful. This position should motivate them to help add as much value as possible.

Deep pockets. If your small business needs financing later, angel investors might make follow-up investments.

Different qualification requirements. Angel investors look primarily at you and your business’s potential, which means they are a good alternative funding source if your business can’t get financing from a bank or financial institution.

Disadvantages of angel investors

Scrutiny. Investing in a startup is risky, and angel investors are typically looking for a high-growth type of business. Even if you think your company offers outstanding growth potential or a game-changing product, angel investors still might reject your pitch.

Shared control. Some angel investors might demand a large ownership position, and you may end up selling more of the company than you had planned.

Time consuming. Do due diligence on an angel investor to ensure their interests are aligned with yours. Ask for references and, if possible, talk with other startups that raised money from this investor. You may prefer an angel investor who will be a business partner, help your company grow and contribute to its success, instead of one who's just looking for a return on their investment.

Startups and early-stage businesses that can be scaled for growth are generally the most attractive angel investments. This means your business should be able to increase its sales very quickly over the next few years without a huge increase in fixed costs and expenses. This should be detailed for a potential investor in components of your business plan , like financial projections and market analysis.

If you’re willing to give up ownership and potentially control of your company — and think you’d benefit from bringing an experienced investor on board — then angel investors could be a smart move.

You can find potential angel investors in places like these:

The Angel Capital Association , which is the official industry alliance of over 250 of the largest angel investor groups in the United States.

AngelList , which helps match founders with investors.

Gust , which evaluates various funding sources for startups.

MicroVentures , an investment bank offering private market investments.

The Angel Resource Institute , a nonprofit that provides education and information on the best practices in the field of angel investing.

If you’re having trouble finding an angel investor, or you decide angel investing isn’t right for your business, there are some alternatives:

Startup business loans . Banks , online lenders or alternative lenders like community development financial institutions (CDFIs) may offer startup business loans, especially if you have been operating already. Loans can be difficult to qualify for and keep you locked in with fixed payments over a set period of time, but do not require you to trade ownership in your business for funding.

Startup business grants . While grants offer free money, they can also be difficult to find and qualify for, and come in smaller amounts than loans or angel investments.

Venture capital . Though similar to angel investing, venture capital (VC) is early-stage business funding by a firm or company as opposed to a wealthy individual. Venture capital can be slightly more difficult to qualify for, and usually VC firms invest in a company after an angel investor.

Equity crowdfunding . Another form of equity financing whereby you trade equity or ownership in your company for funding, equity crowdfunding makes use of the internet to find groups of investors. Online platforms allow business owners to share information about their business with potential investors.

On a similar note...

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How To Present a Business Plan to an Angel Investors

December 9, 2021

Making it to the table with a qualified angel investor is quite an accomplishment. Think about it for a moment. Millions of would-be entrepreneurs would love the opportunity to sit before someone who has the ability to underwrite their small business dream. If you get the call and you’re invited to meet with one, by all means, consider it an honor. By getting the meeting, you’ve won a battle that so many lose, day in and day out. Now, with that victory safely nestled away on your resume, it’s time to go out and win the war. Yes, it’s time to win the war.

If you’re ready to sit before an angel investor, then these are the things you must have to come out victorious and with the funds, you need to get your small business dream off the ground and running.

Creating a Business Plan for Investors

Angel Investors are definitely going to want to see a professional business plan that outlines your model and shows them you have a command of the opportunity. This is a given so when you’re scheduling time to meet with them, understand that one of them, if not the first thing this person will ask for, is your business plan.

There are a few key areas that your business plan must cover including the following:

Reasons to Invest

The Angel Investor is going to want you to give them a reason to invest in your venture. A reason to invest is sometimes commonly referred to as The Pitch. Within yours, there has to be a solid, clearly defined driver that resonates with and gets their financial wheels turning. To put it in simple terms, an Angel is looking for a “why” as they listen to you. With that being the case, weave your Pitch narrative into the executive summary and use it to set the tone for your meeting as you begin building a rhythm with the investor.

Investment structure

An Angel Investor will want to see how the investment is structured. Will there be multiple rounds of capital investments or a single infusion? In either case, be prepared to explain why you’ve chosen to position your ask in that manner. Will there be opportunities to convert funds they invest into equity and if so, how much equity are you willing to offer?

Management Team

During your meeting, the Angel Investor is going to want to know about the management team you’ve assembled. The business plan you present should have balanced biographies of each member, their duties, headshots, and highlights of their respective skill sets. Remember, the Angel Investor is meeting with you, but they’re looking to partner with your entire team. For this reason, it’s important that your business plan shows the full scope of their skills and communicates the value each one brings to the opportunity.

Parameters of the Partnership

In some cases, Angels want to do more than just invest in a project. They’re actually interested in rolling up their sleeves and going to work. If this is something you’re willing to offer, take time to spell out those parameters in your business plan. If the Angel has a certain skill set that your business might be lacking, offering them the chance to come on board might be the route to take. Remember, they win when you do, so offering them a position might be just the thing to move the proverbial needle in your favor.

Exit Strategy

Every business plan presented to an Angel Investor has to include an Exit Strategy. An Exit Strategy is defined as a plan to liquidate a position once predetermined criteria have been met. So, with that, be sure your business plan includes an Exit Strategy with several criteria to choose from.

Some of the questions regarding exit strategies include:

Will their exit strategy be contingent on a certain profit objective?

Can they exit after an IPO?

Will a buyout or acquisition trigger an exit?

Will the Angel be given the opportunity to re-invest should they decide to recoup their initial investment and any interest?

All these areas must be addressed in this portion of your business plan.

Presenting Your Business Plan to Investors

How you present your business plan is almost as important as the document itself. Remember, no matter how well the plan is written, in this meeting you are the voice that brings it to life! There are a few things you must focus on as you ready yourself to present.

Practice bringing your business plan to life. Think of it this way, if all the meeting consisted of was you dropping off a business plan, shaking hands, and hoping to hear back in a few days, then what was the point? No, the Angel took the meeting because they wanted to hear from you. So, practice, practice, and then practice some more. One other thing to consider is that Angels like stories. In fact, where they’re sitting right now is a story in itself. Take this time to tell them yours and watch them tell you theirs. This friend is how partnerships are born, deals are sealed, and the journey toward success begins.

Understand the Problem

At some point, probably early on, the Angel is going to want to know what problem your opportunity solves. Be sure you’re ready to speak to this in great detail. Don’t be afraid to show the work you’ve put into your vision as they truly want to hear from you. As you’re discussing the problem and your unique solution, be sure to do it with enthusiasm. Angels love the enthusiasm. It sparks something in them, and they begin to see themselves as part of your solution, imagining the difference they can make if they decide to invest.

Will your product or service have a societal impact? If so, don’t hesitate to mention that people like these absolutely love to be a part of ideas and ventures that are making a difference in our world. Is there an environmental component to your business? If the answer is yes, spend time enthusiastically describing the impact and how you see it making the world a better place.

The Investor Business Plan Writers at the Coley Group Can Help

When it comes to developing business plans that pass the Angel Investor test, The Coley Group sits at the head of the class. We specialize in developing professional business plans that appeal to investors and position our clients to secure the seed capital they need to drive incremental, long-term success. Over the years we’ve written investor-grade business plans for clients throughout the globe. From the US to the UK, Canada, Mexico, Asia, and beyond, words flowing from our staff of MBA writers have graced every continent.

We welcome the opportunity to serve you. If you have any questions regarding the services we offer, please contact us today.

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How to Structure Your Pitch Deck for Angel Investors

Startup investing is a high-stakes, highly competitive business. Angel investors and venture capitalists are constantly on the lookout for the next tiny startup that could strike it big. As savvy investors, however, they’re also attuned to potential issues and red flags that could dissuade them from funding your company.

The good news is that you can stand out from the crowd and make an excellent first impression by building a great pitch deck. But do you know how to create a pitch deck in the first place?

Your pitch deck is one of the most important elements when you prepare a pitch for angel investors . In this startup pitch deck guide, we’ll discuss everything you need to know.

How do you make a pitch deck for an investor?

Your first question might be: “What is a pitch deck?” In the field of angel investing , a pitch deck is a short yet informative presentation that lays out the basic details of your company. This includes your startup’s leadership team, mission, industry, products and services, high-level financials, growth strategy, and fundraising needs.

You can think of a pitch deck like a business card for your startup, soliciting interest in your company. Pitch decks provide all the high-level relevant information that potential investors need to know during the angel investment stage.

Importantly, the goal of a pitch deck is not to help you raise money—at least directly. Rather, a high-quality pitch deck will help get you to the next step: a seat at the meeting room table, where you’ll discuss funding with angel investors.

What should be in an investor pitch deck?

The role of the pitch deck is to quickly and concisely give potential investors an overview of your business. It should explain why they should fund your startup. However, there’s more to mastering the art of the investor pitch deck .

Although every startup is different, there’s a “language” that angel investors have come to expect from founder pitch decks. Your slides should contain various pitch deck building blocks that investors are looking for.

For one, most startup thought leaders recommend including a maximum of 10 to 20 slides. This allows investors to peruse it in just a few minutes. If your pitch deck is too short, you risk omitting crucial information. If it’s too long, you risk losing the investor’s attention. Including visually appealing images, graphs, and charts will also help sustain an investors’ interest throughout the presentation.

Instead of following a “one-size-fits-all” template, your pitch deck should be customized. Create different slides tailored to specific audiences. This enables you to easily swap your slides in and out to fit individual investors.

With all that said, what should you include in your startup pitch deck? Below are the essentials for how to create a pitch deck .

Pitch deck cover: The start of your pitch deck should set the tone for what’s to come. A pitch deck cover should include your business name, logo, and contact information. It should also include a tagline and/or visual that effectively communicates your mission.
Value proposition: Your value proposition is a short, high-level, one-sentence summary of the value that your company provides to customers. For example, saying that your startup is “Uber for X” (i.e. providing on-demand services from a mobile app) is a common value proposition.
Business problem: Your business problem is the issue or gap in the market that your startup aims to solve. In the rest of the pitch deck, you will explain how your company is uniquely able to address this problem.
Market opportunity: Even with a legitimate business problem, you need to prove that there is significant demand for the problem to be resolved. This slide should discuss your startup’s total addressable market (TAM), i.e. the potential revenue opportunity for your products and services.
Solution: This slide showcases the products and services that your startup offers. In particular, discuss how customers can use these products to address the business problem.
Business model: In this slide, explain how your company plans to make money from your products and services. It could be subscription fees, one-time purchases, advertisements, etc.
Financials: Although you don’t need to include a full tax form, your pitch deck should incorporate the crucial financial models for your startup. This may include your cash flow statement, income statement, and sales and growth projections.
Competitors: Every business has its rivals, and a careful understanding of the market landscape is critical. This slide should discuss your closest competitors and why customers will patronize your business instead of theirs.
Leadership: This slide is the place to mention key startup personnel such as founders, co-founders, and executives like the CEO, CTO, and COO. Mentioning your credentials and previous experience helps reassure potential investors that you have the skills to back up your business vision.
Fundraising: Last but not least, your pitch deck should conclude with the amount of funds your startup is seeking. You should also discuss how you plan to use these funds (e.g. hiring new employees or developing a new product).

How do you pitch an angel investor?

Sending out your startup pitch deck is the first stage in pitching an angel investor. Typically, your deck should be attached to a brief message (e.g. through email, LinkedIn, or the investor’s website) that succinctly presents your case without directly asking for funding.

If your pitch deck is well-written enough to generate interest, the next step is for investors to reach out to you for a one-on-one meeting. This meeting should further build on the themes outlined in your deck. This includes the business problem, the market opportunity, your business solution and products, your financial models, etc. Put forth a concise and winning argument for investing in your startup, and be sure to leave time at the end for Q&A.

Presenting to VCs and angel investors is its own skill, and you may need to go through many presentations and meetings before you get a nibble of interest. Once an investor wants to move forward, the next step is to go through the due diligence process. During this stage, investors may assess your company in terms of factors such as:

The competency of the management team.
The quality of your products and intellectual property.
The long-term potential and market opportunities for your startup.
The underlying assumptions of your company’s financial models.
The risks and competitors that your startup faces.
The possible exit strategies for your startup.

Your Pitch Was Rejected? Rebounding from Investor Rejection

0 to 100 in 24 Months: How Strategic Networking Catalyzed a $110M Exit

Looking for startup advice, connections, and insights?

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Entrepreneurship

What Do Angel Investors Look for in a Business Plan?

Angel investors are individuals or groups that invest in start-up businesses in exchange for equity ownership. They are an important source of funding for entrepreneurs, but they are also highly selective about the businesses they choose to invest in. In order to secure funding from an angel investor, you need to have a solid business plan that addresses all of their concerns and shows them that your business has the potential to succeed. Here are some of the things that angel investors look for in a business plan.

1. Market Potential

The first thing that angel investors look for in a business plan is market potential. They want to see that your business has a large and growing market that is not already saturated with competitors. You should be able to clearly define your target market and explain how your product or service meets their needs. It’s also important to show that you have a strategy for reaching your target market and that you understand the competition.

One way to demonstrate market potential is to conduct market research. This can involve surveys, focus groups, or other methods of gathering information about your target market. You should also analyze industry trends and projections to show that your business is relevant and has the potential for growth.

2. Unique Value Proposition

Angel investors want to see that your business has a unique value proposition that sets it apart from the competition. Your value proposition should clearly explain what makes your product or service different and why customers would choose it over other options. This can be achieved through features, benefits, or a combination of both.

It’s important to demonstrate that your value proposition is sustainable and scalable. This means that you can continue to provide value to customers over time and that you have a plan for expanding your business as it grows.

3. Management Team

Angel investors want to invest in businesses that have a strong management team. This means that you need to have experienced and knowledgeable individuals who can lead your business to success. Your management team should have a clear understanding of the industry and market, as well as the ability to execute your business plan.

It’s important to provide detailed biographies of your management team and explain how their skills and experience will contribute to the success of your business. You should also show that you have a plan for attracting and retaining top talent as your business grows.

4. Financial Projections

Angel investors want to see that your business has a clear path to profitability and that you have a realistic plan for achieving your financial goals. This means that you need to provide detailed financial projections that show how you will generate revenue and manage expenses.

Your financial projections should be based on realistic assumptions and take into account potential risks and challenges. You should also provide a clear timeline for reaching key milestones and achieving your financial goals.

5. Scalability and Exit Strategy

Angel investors want to invest in businesses that have the potential for rapid growth and a clear exit strategy. This means that you need to show that your business is scalable and that you have a plan for exiting the business and providing a return on investment.

Your scalability plan should explain how you will expand your business and increase revenue as it grows. Your exit strategy should provide a clear timeline for when and how investors can expect to see a return on their investment.

6. Intellectual Property

Angel investors want to invest in businesses that have a strong intellectual property portfolio. This means that you need to have patents, trademarks, or other forms of intellectual property that protect your products or services.

You should provide details about your intellectual property portfolio and explain how it will provide a competitive advantage for your business. It’s also important to show that you have a plan for continuing to develop and protect your intellectual property as your business grows.

7. Use of Funds

Angel investors want to see that you have a clear plan for how you will use the funds they invest in your business. This means that you need to provide a detailed budget that shows how you will allocate the funds to various aspects of your business.

You should explain how the funds will be used to achieve your business goals and provide a clear timeline for when and how the funds will be spent. It’s also important to show that you have a plan for managing cash flow and ensuring that the funds are used effectively.

8. Risk Management

Angel investors are aware that investing in start-up businesses is risky. They want to see that you have a plan for managing risks and minimizing potential losses. This means that you need to identify potential risks and challenges and explain how you will mitigate them.

Your risk management plan should include a detailed analysis of potential risks and challenges, as well as a plan for addressing them if they arise. It’s important to show that you have a realistic understanding of the risks involved in your business and that you have a plan for managing them effectively.

9. Social Impact

Angel investors are increasingly looking for businesses that have a positive social impact. This means that you need to demonstrate that your business is committed to making a positive difference in society.

You should explain how your business will have a positive impact on the community and provide examples of how you have already made a difference. It’s also important to show that you have a plan for measuring and tracking your social impact as your business grows.

10. Presentation and Communication Skills

Angel investors want to invest in businesses that are well-presented and communicate effectively. This means that you need to have strong presentation and communication skills.

You should be able to clearly and concisely explain your business plan and answer any questions or concerns that investors may have. It’s also important to provide professional and well-designed materials, such as a pitch deck or executive summary.

In conclusion, angel investors look for a combination of factors when deciding whether to invest in a start-up business. By addressing these factors in your business plan and demonstrating that your business has the potential for success, you can increase your chances of securing funding from an angel investor.

Frequently Asked Questions

What key factors do angel investors consider while evaluating a business plan.

Angel investors evaluate a business plan based on various factors. One of the most critical factors is the team behind the business. Angel investors want to invest in a team with a strong track record of execution and relevant experience in the industry. The business plan should showcase the team’s strengths and demonstrate their ability to take the business to the next level.

Another factor that angel investors look for is a clear and compelling value proposition. The business plan should articulate the problem the business is solving and how it is better than existing solutions. The plan should also outline the target market and the potential demand for the product or service.

What are the financial projections that angel investors expect to see in a business plan?

Angel investors expect realistic financial projections that demonstrate the potential for the business to become profitable. The financial projections should include a detailed profit and loss statement, cash flow statement, and balance sheet. It should also include assumptions on revenue growth, costs, and margins. Angel investors will scrutinize the assumptions to ensure that they are achievable and realistic.

In addition to the financial projections, angel investors will also look for a clear understanding of the key performance indicators (KPIs) that will drive the business’s success. These KPIs may include customer acquisition cost, customer lifetime value, and gross margin.

How important is the market analysis in a business plan for angel investors?

The market analysis is a critical component of a business plan for angel investors. This section should demonstrate a deep understanding of the market, including the size, growth rate, and trends. Angel investors want to see that the business has identified a gap in the market and that there is a significant opportunity to capture market share.

The market analysis should also provide insights into the competitive landscape. Angel investors want to see that the business has a clear understanding of its competitors and how it plans to differentiate itself. This section should also outline the barriers to entry and the regulatory environment.

What are the common mistakes that entrepreneurs make in their business plans?

One common mistake that entrepreneurs make is not being clear about their target market. The business plan should clearly identify the target customer and the problem the business is solving for them. Another mistake is not providing a clear and compelling value proposition. Angel investors want to see that the business is offering a unique and innovative solution to a problem.

Entrepreneurs also sometimes fail to provide realistic financial projections. The financial projections should be based on realistic assumptions and demonstrate the potential for the business to become profitable. Finally, entrepreneurs may overlook the importance of the team behind the business. Angel investors want to invest in a team with a strong track record of execution and relevant experience in the industry.

What are the next steps after submitting a business plan to angel investors?

After submitting a business plan to angel investors, the next step is to prepare for the due diligence process. Angel investors will want to conduct a thorough investigation of the business to confirm the assumptions made in the business plan. This may include reviewing financial records, speaking with customers and suppliers, and interviewing key members of the team.

Entrepreneurs should also be prepared to negotiate the terms of the investment. This may include the amount of equity that the angel investor will receive in exchange for their investment and the terms of the convertible note or equity investment. Finally, entrepreneurs should be prepared to demonstrate their ability to execute on the business plan and take the business to the next level.

In conclusion, it is important to understand that angel investors are not just looking for a good business idea, they are looking for a comprehensive business plan that demonstrates the potential for success. This means that your plan should include a clear description of your products or services, competitive analysis, marketing strategies, financial projections, and a solid understanding of your target market.

Additionally, angel investors want to see that you have a strong team in place with the right skills and experience to execute your plan. They are also looking for entrepreneurs who are passionate, dedicated, and have a track record of success.

Finally, it is important to remember that angel investors are not just providing capital, they are also providing valuable advice, expertise, and connections. Therefore, it is important to develop a strong relationship with your investors and keep them updated on your progress. With a well-crafted business plan and the right team in place, you can attract the attention of angel investors and take your business to the next level.

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How to Approach Angel Investors: Do’s and Don’ts for Startups

In the challenging world of startup funding, approaching angel investors is a critical step. Learn the essential "do's" for success, And avoid common "don'ts"

Securing funding for a startup can be a challenging task that requires careful consideration. One avenue that holds significant promise is seeking investments from angel investors. These HNWIs can provide the necessary capital, invaluable guidance, and mentorship to help a startup thrive. However, approaching angel investors requires finesse, strategy, and a clear understanding of the dos and don’ts regardless of your industry: healthcare, fintech, etc. In this article, we will delve into the world of angel investors, exploring the key steps and common mistakes that should be avoided to maximize the chances of success. Whether one is a first-time founder or a seasoned entrepreneur, this guide will provide essential insights on approaching angel investors effectively.

The Do’s

Research Your Target Investors

When trying to attract angel investors , it is recommended that you seek out individuals who have a record in investing in startups similar to your own. It’s essential to consider factors such as the stage of your startup, the typical investment amount, angel investors in your city/region, the startup funding opportunities available, and their risk tolerance. Considering these considerations, you can better target suitable investors for your business venture.

Build a Strong Pitch Deck

When pitching to angel investors , craft an impactful and concise presentation that visually and effectively portrays the unique value your startup offers, the potential of the market you intend to serve, the expertise and qualifications of your team, and the financial projections that support your growth plans. Your pitch checklist should include the use of compelling graphics and data-driven insights. Effective startup pitch techniques make a convincing argument and inspire confidence in potential investors or stakeholders. A helpful pitch deck tip to remember that if you have confidential information you’re worried about, it’s best not to include it in your product pitch deck. Requesting people to sign a non-disclosure agreement (NDA) can sometimes cause friction. You should only request an NDA when you genuinely think it’s necessary. Our pros here at Marquee Equity can help you tailor-make successful angel investor pitches by creating effective startup pitch techniques that build trust with startup investors right from the get-go.

Develop a Solid Business Plan

Develop a comprehensive business plan that provides a detailed overview of your long-term vision, including your goals, objectives, and how you plan to achieve them. Your plan should also include specific milestones to measure your progress and growth strategy to help you reach these milestones. Additionally, it’s essential to identify potential challenges and risks your business may face and outline strategies to mitigate them to ensure your long-term success.

Network

One of the best practices for startup funding is to leverage your existing network to get introductions to angel investors on social media or startup funding workshops offline. Your angel investor outreach online must start by establishing a professional online presence for your startup with a website, social media, and LinkedIn accounts. Maintain updated and engaging profiles to reflect your expertise and business credibility. Building a strong online presence for startup funding is vital to success in the business world.

Show Traction

Ideally, this should be done during the initial angel investor meeting . Demonstrate that your startup is gaining traction in the market by showing evidence that your startup is gaining traction in the market through metrics such as user growth, revenue, partnerships, or other key indicators. If available, highlight customer testimonials or case studies to support your startup’s success further.

Be Transparent and Honest

Nurture relationships with angel investors by being transparent about your startup’s challenges, risks, and limitations. Avoiding exaggeration and making unrealistic promises is essential to maintaining angel investor connections.

Send Unsolicited Emails

Avoid cold emailing angel investors without prior connection or intro. It’s unlikely to get a response and may be considered spam.

Maintaining transparency while safeguarding sensitive information that could jeopardize your startup’s security is crucial. Avoid sharing sensitive information that could be misused.

Disregard Due Diligence

During the due diligence process, it is imperative to be well-prepared to provide investors with the necessary documents, financial statements, and references. Maintaining transparency and avoiding withholding any pertinent information that could impair your reputation or business relationship is essential.

Be Impersonal

Treat investors as partners, not just sources of funding, and actively seek their expertise and advice. Lastly, a common pitch deck guideline is to avoid sending generic, one-size-fits-all pitches.

Don’t Pressure for Quick Decisions

Give investors time to evaluate your proposal and ask questions. Avoid pressuring them for an immediate decision.

Neglect Follow-Up

It’s important to have a clear understanding of where things are heading. As a rule, don’t forget to express your gratitude at the end of the meeting. Remember that you want your business to last for the long haul, and having good etiquette and showing courtesy can help you achieve that. Maintain open communication even if they initially decline.

Don’t Disregard Rejections

If an investor decides not to invest, respect their decision and maintain a positive relationship. They may reconsider in the future or introduce you to other potential investors. Remember that building relationships with angel investors takes time and persistence. When interacting with others, remember that it’s an opportunity for growth, even if it doesn’t result in immediate funding. Each interaction allows you to enhance your entrepreneurial training and learn more about angel investment fundraising strategies , even if it doesn’t yield instantaneous results. Creating a network of supportive investors is just as crucial as obtaining capital for your startup’s long-term success.

Tying It All Up

To become a successful startup, securing funding from angel investors can be a game-changer. While the process may not be simple, following the do’s and don’ts outlined in this blog, you’ll gain valuable strategies to help take your startup to new heights. Remember to thoroughly research potential investors, craft a compelling pitch, and demonstrate a solid business plan with a clear path to profitability. Embrace rejection as a part of the journey and be determined and resilient in navigating the world of angel investing. To become the next angel investment success story , call our pros at Marquee Equity at +1-213-600-7272.

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An angel investor is an affluent individual who provides critical capital and funding to startups during their nascent stages. Distinct from venture capitalists and private equity firms, these investors not only offer financial support in the form of money but also contribute mentorship and strategic networking opportunities.

Key Takeaways

An angel investor provides essential capital and resources in the early stages of a startup, often filling a crucial gap before venture capitalists step in.
Beyond money, an angel investor contributes valuable mentorship, industry insights, and networking opportunities to a new company.
A well-crafted business plan is vital for startups to attract angel investors, as it demonstrates the potential for growth and return on investment.
Angel investing plays a significant role in the entrepreneurial ecosystem, offering not just funding but also strategic guidance to startups.
Understanding the dynamics of angel investing, including the differences between an angel investor and other types of investors, is crucial for startups seeking early-stage funding.

Angel investors are pivotal for entrepreneurs in transitioning from initial concept to a viable business, often bridging the crucial early funding gap.

Historically, angel investing began as informal investing by wealthy individuals in promising startups. Over time, this evolved into a more structured approach to early-stage financing. Today, an angel investor remains integral to the startup ecosystem, often stepping in where traditional financing methods are inaccessible. As the business landscape continues to evolve, the role of angel investors in providing both capital and invaluable guidance continues to be of paramount importance, underscoring their enduring relevance in nurturing new business ventures.

Pre-Planning Process

An angel investors, pivotal in the startup ecosystem, often does not directly engage in a founder’s pre-planning process. This stage, essential for foundational development, precedes external funding and is where the business’s core ideas and strategies are refined. Despite their indirect role, understanding this phase is crucial for angel investors, as it reveals the new company’s potential and strategic direction.

The pre-planning phase is where startups identify their target market, develop their business model, and analyze competitors. For an angel investor, these insights are crucial. They demonstrate the startup’s market understanding, the viability of its business model, and the strength of its value proposition. While an angel investor provides capital, their decision to invest hinges on the quality of the founder’s pre-planning.

Angel investors look for signs of a robust pre-planning process, including a well-defined business model and realistic market assessments. This knowledge is key in evaluating a startup’s readiness and potential success, influencing their investment decisions.

The pre-planning process offers angel investors a lens to assess new company viability and guides them in their capitalallocation, underscoring their critical role in the entrepreneurial landscape.

Business Plan Document Development

A well-crafted business plan is a linchpin for a startup seeking to attract an angel investor. It’s not just a document; it’s a testament to the founder’s vision, strategy, and potential to scale. For angel investors, who often bridge the gap between self-funding and venture capital, the business plan serves as a critical tool in evaluating the feasibility and future profitability of their investing endeavors.

An angel investors primarily looks for clarity and thoroughness in a new company’s business plan. They seek detailed insight into the new company’s value proposition, market analysis, and competitive landscape. A comprehensive business plan should also clearly outline how the startup intends to use the angel investor’s capital. It should detail the expected milestones and how each tranche of funding will drive growth and development. This transparency in financial planning and allocation of resources assures investors that their money is being put to optimal use.

Furthermore, investors examine the business plan for realistic financial projections and a well-thought-out exit strategy. This includes understanding the new company’s revenue model, cost structure, and the break-even point. They also assess the management team’s competence, as their ability to execute the plan is as crucial as the plan itself.

In essence, the business plan is a pivotal factor for angel investors. It not only showcases a new company’s potential for success but also reflects its readiness to effectively manage and grow with the invested capital.

Startup Entrepreneurs

The journey of a startup entrepreneur seeking angel investment is often illuminated by inspiring success stories. These narratives, where startups turn into market leaders with the backing of an angel investor, sets a compelling precedent. As an entrepreneur, it’s essential to understand what to expect when seeking angel investment. Unlike venture capitalistsor private equity firms, angel investors, often termed as business angels or informal investors, typically engage during the early stages, providing not just capital but also valuable mentorship and network access.

When approaching an angel investor, startups should focus on crafting a compelling pitch. This pitch should clearly articulate the investment opportunity, how the startup plans to use the funding, and its potential for growth. It’s crucial for the founder to convey their passion, the uniqueness of their business, and how it stands out in the market. The ability to effectively communicate the startup’s vision and strategy is key in attracting angel investment.

Real-life case studies of startups that successfully secured angel investment can offer practical insights and relatable experiences. These stories often highlight the importance of aligning the new company’s goals with the interests of the angel investor and the significance of transparent communication.

In conclusion, best practices for engaging with angel investors include thorough preparation, clear articulation of the investment opportunity, and being open to investment advice. Navigating this path requires understanding the nuances of angel investing and effectively leveraging the unique support that these early-stage investors provide.

Business Students

Angel investing holds a unique allure in the entrepreneurial landscape, particularly for business students exploring the intricacies of early-stage financing. The educational journey into understanding angel investment encompasses grasping the nuances of how angel investors, distinct from venture capitalists or institutional investors, play a pivotal role in a new company’s growth. Unlike traditional sources of capital, angel investors often bring a combination of money, mentorship, and networking opportunities to the table.

The theoretical aspects of angel investing cover a range of topics from the evaluation of investment opportunities to understanding the securities act and its implications for startups and investors. Business students should delve into the concept of equity financing, where investors like angel investors and seed investors acquire a stake in the new companyin exchange for their funding. This study also involves exploring venture research, analyzing deal flow, and understanding the roles of various stakeholders, including high net worth individuals.

Real-life applications provide a relatable context, illustrating how theoretical concepts are applied in the real world. Analyzing case studies and current trends offers insights into the decision-making processes of investors and entrepreneurs.

In conclusion, academic study plays a crucial role in comprehending angel investing. It equips future entrepreneurs and financial professionals with the knowledge to navigate the complex dynamics between startups, investors, and market forces effectively.

The landscape of small and medium-sized businesses (SMBs) is often transformed by angel investments. These investments, known as angel funding, can propel SMBs to new heights, offering not just capital but also strategic expertise. Unlike venture capitalists or venture capital firms, angel investors, including private investors and wealthy individuals, often engage with businesses in their nascent stages. For an entrepreneur or a startup founder, understanding the potential and limitations of angel investing, which could include an angel investment network, is key to harnessing its benefits.

SMBs seeking angel investment should be cognizant of specific criteria and processes. Angel investors typically look for businesses with a strong value proposition and potential for high returns. Unlike non-accredited investors, investors often bring significant money and experience to the table. It’s crucial for SMBs to effectively communicate their vision, market position, and how the funding will be utilized to scale the business.

SMBs considering angel investment should strategically weigh their options. This includes understanding the nuances of equity exchange, aligning with the right investors, and being prepared to leverage the expertise and networks that investors can provide. The right approach can open doors to significant growth and development opportunities for SMBs.

Frequently Asked Questions

What differentiates angel investors from venture capitalists?

Angel investors and venture capitalists have distinct roles in the startup ecosystem. The scale of investment is a primary differentiator; angel investors typically provide smaller amounts of capital compared to venture capitalists. They usually get involved at an earlier stage, often when the startup is in the ideation or development phase, offering seed funding. In contrast, venture capitalists generally engage at later stages when the startup has established operations and a clearer path to profitability. Additionally, investors may offer more flexible terms and take a personal interest in the entrepreneur’s success, whereas venture capitalists focus more on the financial returns and business scalability.

How do angel investors typically contribute beyond capital?

Beyond providing capital, angel investors often bring invaluable non-monetary contributions to a new company. This includes mentorship, where they share their expertise and experience, guiding the founder through the complexities of growing a business. They also offer network access, connecting entrepreneurs with potential customers, partners, and even future investors. Strategic advice from investors can be crucial, as they may have industry insights and operational knowledge that can help steer the new company towards success.

What are common terms and conditions set by angel investors?

The terms and conditions set by angel investors often revolve around equity exchange and the future financial trajectory of the startup. Common agreements include equity stakes in return for funding, with expectations clearly outlined regarding the new company’s growth and potential exit strategies.Investors may also seek advisory roles or board positions. The use of an angel investor tax credit is another aspect, especially in jurisdictions that offer tax incentives for investing in startups. It’s advisable for entrepreneurs to consult with a financial advisor or an accredited investor to understand these terms thoroughly and ensure alignment with the new company’s goals and capabilities.

Related Terms

Also see: Venture Capital (VC) , Seed Round , Equity Financing , Accredited Investor , Early-Stage Startup , Startup Assets

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How to Write a Business Plan for Angel Investors
Financial Plan. The financial section of your business plan is one of the most important parts, as it will show angel investors how you plan on making money and how much return they can expect on their angel investment. This section should include your income statement, balance sheet, and cash flow statement.
Business Plan Template for Angel Investors
Follow these steps to effectively use the Business Plan Template for Angel Investors in ClickUp: 1. Define your business concept. Start by clearly articulating your business concept and value proposition. Explain what problem your product or service solves, who your target market is, and how your offering is unique.
Angel Investors: The Ultimate Angel Funding Guide
Specifically, angel financing amounts typically range from $25,000 to $500,000. For this money, angel investors usually gain 10% to 35% of the equity of the company. Angel investors generally expect to earn returns of approximately 30% from their private company portfolio.
How to Fund Your Business With Angel Investors
Angels tend to start with small investments and add as they see progress. Opinions expressed by Entrepreneur contributors are their own. This is part 7 / 11 of Write Your Business Plan: Section 2 ...
How to Land Funding From Angel Investors
2. Create your executive summary or one-page pitch. You need a compelling business plan executive summary to communicate with investors. Prepare a brief but exciting email, one page at most, outlining the growth prospects, type of business, and potential investor payoff. Prepare an investor summary memo or one-page business pitch.
How to Find Angel Investors for Your Startup (7 Tactics)
6. Engage with an incubator or accelerator. Startup accelerators and incubators provide valuable opportunities to find and connect with angel investors. Many of the leaders of these organizations look for startups to invest in, and they have valuable connections in multiple industries.
How to Write a Convincing Business Plan for Investors
Financial forecasts. Investors will inevitably want to see your financial forecasts. You'll need a sales forecast, expense budget, cash flow forecast, profit and loss, and balance sheet. If you have historical results, you should plan on sharing those too as well as any other key metrics about your business.
How to Write a Business Plan For Investors
Identify the three to four key factors that make your company a great opportunity and make sure they're included in this section. 3. Team Overview. This is where you introduce your team and how you'll work together to bring the business to life. An ideal Team Overview section makes the case not only that your team is the right team for the ...
angel Investor Business Plan
Developing a Business Plan Angel Investors Will Be Interested In. Joorney has delved into the requirements of business plans and has experience in covering all the critical aspects of business plans for angel investors. As startups and small businesses compete for funding, proper consideration of the crucial elements needed to convince them to ...
What angel investors want to see in a startup's business plan
"A business plan must show the investor's thinking and vision for the business." A business plan is as important as the pitching deck "It is vital," says Nick Lyth, CEO of Green Angel Syndicate. "In the first place, it is a description of where the business is aiming to go, and how it intends to get there.
Angel Investors: Who They Are, Pros and Cons
Before becoming an editor, she was NerdWallet's authority on taxes and small business. Her work has appeared in a variety of local and national outlets. See full bio. Angel investors are high net ...
Angel Investors: What Is Angel Investing & How Does It Work?
Angel investors fund businesses in many industries. According to the Center for Venture Research at the University of New Hampshire, 2020 was the first time in several years that angel-funded businesses were in the seed and startup stage. 1 The total investments during that year were $25.3 billion - a 6% increase over 2019. 2
A Complete Guide to Angel Investors for Small Businesses and ...
1. The team. Angel investors want to see a strong and dedicated team in place, with the necessary skills and experience to execute the company's business plan. 2. Market opportunity. The investor wants to invest in a business that has a large and growing target market, with a clear and proven customer demand. 3.
How To Present a Business Plan to an Angel Investors
Every business plan presented to an Angel Investor has to include an Exit Strategy. An Exit Strategy is defined as a plan to liquidate a position once predetermined criteria have been met. So, with that, be sure your business plan includes an Exit Strategy with several criteria to choose from. Some of the questions regarding exit strategies ...
5 Details Angel Investors Look For In A Business Plan
Angel investors are savvy when it comes to industry experience, and they want to see that you have what it takes to make it in the marketplace. They want entrepreneurs that have intimate knowledge of the industry they are looking to break into and have even worked in a similar business for a time or two. This can help your business plan sing as ...
Angel Investor Business Plan With Angel Investors List
Complete guide to create a compelling angel investor business plan with our expert insights, strategies and list of angel investors.
How to Structure Your Pitch Deck for Angel Investors
Pitch deck cover: The start of your pitch deck should set the tone for what's to come. A pitch deck cover should include your business name, logo, and contact information. It should also include a tagline and/or visual that effectively communicates your mission. Value proposition: Your value proposition is a short, high-level, one-sentence ...
How to Pitch to Angel Investors
An angel investor or early stage venture capitalist will look at 1) is the business idea simple enough for me to understand and buy into, 2) does it solve a problem or meet a need, 3) is it a big ...
What Are the Most Important Considerations for Angel Investors?
The Most Important Considerations for Angel Investors. These are some of the most important considerations angel investors keep in mind before deciding whether to invest in a startup. Financials ...
What Do Angel Investors Look For In A Business Plan?
Angel investors are individuals who invest their own money in startup companies in exchange for a percentage of ownership. They are known for taking risks and… They are known for taking risks and supporting new ventures that have the…
How to Approach Angel Investors: Do's and Don'ts for Startups
Here are three essential considerations : Compelling Elevator Pitch: Craft and compelling of elevator pitch that communicates your startup's value proposition, target market, and unique selling points. Investor Alignment: Ensure that the angel investor aligns with your industry, stage, and funding needs. Professional Presentation: Approach ...
Angel Investor » Businessplan.com
The pre-planning process offers angel investors a lens to assess new company viability and guides them in their capitalallocation, underscoring their critical role in the entrepreneurial landscape. Business Plan Document Development. A well-crafted business plan is a linchpin for a startup seeking to attract an angel investor.

Business Plan Template for Angel Investors

Business Plan Template for Angel Investors Benefits

Main Elements of Angel Investors Business Plan Template

How To Use Business Plan Template for Angel Investors

1. Define your business concept

2. Conduct market research

3. Develop a comprehensive financial plan

4. Showcase your team and expertise

5. Craft a compelling executive summary

Get Started with ClickUp’s Business Plan Template for Angel Investors

Template details

Angel Investors: The Ultimate Angel Funding Guide

Check out Angel Investor Formula

How Do Angel Investors Work?

What Are Angel Investors ?

What Does An Angel Investor Do?

Step 1: Preparation

Develop a Solid Business Plan

Develop Your Private Placement Memorandum

Prepare for Due Diligence

Hire the Appropriate Counsel

Set Realistic Investment Terms

Step 2: How To Find Angel Investors

How to Find Angel Investment Groups

How to Find Individual Angel Investors

1. Referrals

2. Networking

3. Focused Prospecting

Retired Executives

Business Owners

Step 3: How To Effectively Pitch To An Angel Investor

Step 4: Closing the Deal

Angel Investing Groups List

Other Helpful Business Plan Articles & Templates

How to Fund Your Business With Angel Investors Angel investors are individuals who use their own money to back entrepreneurs they believe in.

Key Takeaways

Finding Angel Investors

What Angels Investors Are Looking For

More in Write Your Business Plan

How to Write a Convincing Business Plan for Investors

A vision for the future

Product/market fit and traction

Funding needed and use of funds

A strong management team

An exit strategy

Cover letter

Executive summary and/or one-page plan

Financial forecasts

Executive Summary

Opportunity

Market Analysis

Marketing & Sales Plan

Milestones / Roadmap

Company & Management

Financial Plan

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The quickest way to turn a business idea into a business plan

How to Write a Business Plan For Investors (That They Will Love)

The Big Picture

The Big Questions

1. Executive Summary

2. Investment Opportunity

3. Team Overview

4. Market Opportunity

5. Company Synopsis

6. Revenue Model

7. Traction/Company Milestones

8. Industry Analysis

9. Differentiating Factors

10. Target Audience

11. User Acquisition and Marketing Strategy

12. Future Growth and Development

13. Financial Overview

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How To Get Angel Investors To Fund Your Business Idea

The Critical Elements Angel Investors Look For

Purpose & Passion

Market Knowledge

Concrete Management Principles