Standing in front of a room of suited and booted business angels can be pretty terrifying for even the most experience entrepreneur. So we thought we’d help by calculating the success odds for entrepreneurs….
… that way, if this group of business angels doesn’t love your pitch right away, you can still leave with your head held high.
So, let’s carve the room up into 6 sections.
The first two sections will also be fellow entpreneurs here to pitch, along with their advisors.
So, from a room of 36 people, you can assume that only 24 are actually business angels.
Next, let’s divide the remaining angels into 4 groups – The Hustlers, The Sector Hunters, The Collaborators and the Money Men – and take a look at each.
These angels are looking for a deal. Preferably a quick deal. Often they will insist on tough (unreasonable?) terms and will be certain to want to hold onto the business cheque book.
Can you do a deal with these angels? Perhaps – but only if your business model is in a well understood and in a clearly defined business sector where you have a high (relatively) degree of confidence about costs and income.
These angels don’t like concepts or theories. They prefer something they can touch.
Traditional business plans will be required and lots of patience, but for traditional businesses, these guys might be an alternative to banks.
The Sector Hunters
Sector driven angels are looking for a business in the sector in which they familiar.
The challenge for these angels is to see that different sectors boom at different times and that if they have built and sold a business in a given sector, then the chances are that things have moved on and they might need to change sector.
Of course, these angels will recognise this argument, but, when it comes down to getting out the cheque book, they want a relatively high degree of certainty and will often walk away from businesses with which they are less familiar.
Like The Hustlers, these business angels are looking for something they know, but with a new twist and preferable something they can see or touch – so that they can bring their sector experience to bear.
If you find an angel from your sector – then great – the rapport builds quickly and you can often find a valuable member of your team as much as the money you need.
The main trouble with business angel networks is that from a pool of hundreds of business angels may be 20 or 30 angels will attend – which means that chances of finding a sector specific angel are a bit thin. This will vary by region – so in West Midlands UK, you’ll find lots of automotive business angels. In Manchester you might find a few health care business angels and in London you’ll find lot more digital business angels.
This group of angel investors are willing to look at most propositions and, rather than worry about the sector, they are looking at the management team. Can the team deliver? Can they match their promises and can they bring a team of effective people into the business to continue the innovation and rapid progress?
Of all the groups, this group is least likely to want to see a full business plan – they, after all, are investing in people and potential. The idea must be scaleable.
This group are good at handling concepts and things they can’t touch.
They are also likely to be interested in helping the business succeed and be willing to put in time to see the business achieve its goals – as well as to achieve their own investment goals.
The Money Men
Lastly, the final group of business angels is from a corporate finance or accountancy background. These guys care about the numbers and the business plan.
Typically, they will be traditional, but some may have experience of your sector.
Either way, they will quiz your business with logic and expect clear answers.
Of all the groups, these guys are the hardest to fathom.
Business Angel Odds…
Okay, so for all the pitching entrepreneurs – what do your odds look like?
Well, back to our room of 36 people – and 24 angels. If lucky, one quarter will fit the kind of business angel you are looking for. That makes 6 people potential angels in your proposition.
It is also likely that half of those angels are not really actively investing at the time of your pitch.
So, that gives us a figure of 3.
So, if you get 3 good conversations with business angels following your pitch, then you are probably doing well.
… and if you can convert those three conversations into 3 meetings, then you are doing exceptionally well.