Regarding the practical aspects that angel investors want to see from the founders of a business they have invested in, here are ten key expectations.
Few businesses I know do them all regularly, and they should not detract from the business, but follow-on funding becomes easier if you do. If you have taken ‘smart money’, then useful help from Angel Investors should also be forthcoming :
1. Milestone Achievement:
Angel investors expect founders to set clear milestones and deliver on them. They want to see tangible progress and achievement of important targets, such as product development milestones, revenue goals, customer acquisition, or market expansion.
2. Efficient Resource Utilisation:
Investors want to see the founders utilise the invested capital efficiently. They expect the funds to be used to drive growth and achieve the agreed-upon milestones rather than being wasted on unnecessary expenses or mismanaged operations.
3. Financial Transparency:
Founders should maintain accurate and up-to-date financial records. Investors want to see regular financial reports, including income statements, balance sheets, and cash flow statements. Clear financial transparency builds trust and helps investors assess the company’s financial health.
4. Scalability and Growth Potential:
Angel investors seek businesses with significant growth potential. Founders should demonstrate their ability to scale operations and capture a larger market share. Investors want to see evidence of a scalable business model, strategies for expanding into new markets, or plans to enhance existing offerings.
5. Effective Team Management:
Investors understand the importance of a talented and motivated team. Founders should show their ability to attract and manage a strong team. Investors expect founders to build a skilled workforce, delegate responsibilities effectively, and foster a positive and productive work environment.
6. Market Traction:
Angel investors want to see evidence of market traction and customer adoption. Founders should be able to demonstrate growing customer interest, increasing sales, or positive user feedback. Investors want to know that there is demand for the product or service and that the business is gaining a competitive edge.
7. Business Development:
Investors expect founders to actively pursue strategic partnerships, collaborations, or distribution channels that can accelerate growth. Founders should have a clear business development strategy and demonstrate progress in establishing key alliances or securing strategic contracts.
8. Intellectual Property Protection:
If the business relies on intellectual property, angel investors expect founders to take necessary steps to protect it. This includes filing patents, trademarks, or copyrights and maintaining proper documentation to safeguard the company’s intellectual assets.
9. Effective Risk Management:
Investors want to see founders who can identify and mitigate risks effectively. Founders should have a proactive risk management approach, assessing potential threats to the business and having contingency plans in place to minimise the impact of unforeseen events.
10. Timely Communication and Investor Relations:
Founders should maintain open and transparent communication with angel investors. They should provide regular updates, promptly respond to investor queries or concerns, and involve investors in key decision-making processes when appropriate. Investors appreciate being kept informed about the company’s progress and challenges.
By fulfilling these practical expectations, founders can demonstrate their ability to effectively manage the investment and deliver results that align with the investors’ goals. This ultimately strengthens the partnership and increases the likelihood of continued support from the angel investor.
