High-growth startups typically raise capital, particularly in early stages when revenue isn’t yet sufficient to support the speed necessary to be competitive. Unfortunately, this is also the point of a company’s development lifecycle when the risk is particularly high, making traditional sources of funding difficult. Angel investors commonly fill this gap, with deal sizes between $50,000 to $1M.
Angels are usually high net-worth individuals who invest his or her own money in startup companies in exchange for an equity share of the business. Many angels are former entrepreneurs themselves. In addition to financial capital, top angels mentor their portfolio companies and introduce entrepreneurs to potential customers and investors. Learn more from the Angel Capital Association.
It is important to understand what angel investors do not fund — research. Angel investors are looking to invest in things that are ready or very nearly ready for market. Unlike a research grant, where the deliverable is a finished work product, investors are seeking a return on their money. Thus, a team that is not ready to demonstrably show a path to yielding $10 for every $1 invested, is likely not ready.
What do I need to pitch to angel investors?
While each capital group has their own specific requirements, in general, entrepreneurs need, at a minimum:
- Term Sheet
- Pitch Deck (with feedback from at least 10-15 individuals)
- Financial Projections (3-5 years, with detailed assumptions)
- Business Plan, Deal Memo, or Detailed Executive Summary
What should be my state of development as a company?
With constant feedback and refinement from partner angel investors, the E-Center aims to progress teams to a state of “deal investment readiness” across six dimensions:
- Team – Committed team with relationships and roles defined. Advisory board in formation
- Customer Validation – Some traction of customer acquisition (e.g. pre-orders, newsletter followers, social followers, influencer conversions, LOIs)
- Product Development – Iterated, demonstratable prototype
- Go-to-market Strategy – Competitive advantage defined, marketing plan with data and estimated CAC. Some channel test runs.
- Business Model – Feasible financial projections (quotes and data) and clear ROI (>20x) for an investor.
- Legal – Company formation, IP diligence complete or imminent.
The Bulldog Angel Network is a network of MSU alumni and friends of the university providing angel investments to early-stage companies that are majority owned by MSU students, faculty or alumni. BAN seeks four online deal pitch sessions per year from 1 or 2 companies per session. Individuals make their own investment decisions from these deal pitches. BAN is managed by an experienced executive and entrepreneur who has generated successful exits and BAN handles all communication and meetings remotely so that no travel is required by members.
The Mississippi Angel Investor Network is a group of accredited investors who review fundraising pitches from Mississippi-based innovation companies seeking seed and growth capital. The Network is administered by Innovate Mississippi and is comprised of accredited individual and institutional investors from inside and outside of the state.
The NO/LA Angel Network is a group of accredited investors from New Orleans and throughout Louisiana who work together to evaluate, fund and nurture early-stage companies. Our members make individual decisions to invest in high growth Louisiana based businesses, where the path to exit is understood.
Atlanta Technology Angels bring together serious entrepreneurs and seasoned investors to build companies that will lead their industries into the future. We support startup and early-stage companies throughout the Southeast.
We’re a group of investors, business leaders and community leaders committed to growing the Arkansas economy by capitalizing the most promising startup companies in our region and throughout the state. The mission of the Ark Angel Alliance is twofold: 1) To support active investment in startup companies and identify high potential deals, giving preference, but not limited to Arkansas-affiliated deals; 2) To support angel investors through development opportunities that support sound investment decisions and investor connections.
ACN is a 501(c)(3) non-profit organization. Our events and services are designed to bridge the funding gap faced by Alabama companies in the early growth phase of business and facilitate the right connections at the right time for business growth.
North Mississippi Angel Fund (NMAF) was formed in 2017 to pool the capital resources and business connections of accredited investors in and around the State of Mississippi. An underlying mission of NMAF is to establish and enhance lifelong relationships through investment, mentorship, and fellowship. The Fund makes investments in private companies that demonstrate the potential for sustainable, profitable growth capable of providing a suitable return to the investors. The Appalachian Investors Alliance (AIA) is the technical advisor that facilitated the fund’s formation and now administers the fund.