Why Do Angel Investors Invest in Startups?
If you are looking to raise capital, angel investors are an option for funding your food startup. There are several reasons why angel investors choose to fund new businesses despite the risk.
These can include unexploited market opportunities, a potentially scalable business model, proven sales performance, disruptive products, and the opportunity to diversify their investment portfolios.
In this guide, we’ll explore how to fund your food company through angel investors. You’ll learn how to identify key groups, and break down your outreach process to family, friends, and angels. Ultimately, we’ll inform you how to find and pitch angel investors.
Need Help Pitching Angel Investors?
That’s what we do here at Crowdcreate. We’re rated one of the leading marketing agencies and have helped with some of the most successful companies in the world. Book a call with our team to learn more. We can help you connect with Angel Investors for your startup.
Who is an Angel Investor?
- An individual who has a net worth of $1M in assets or more (excluding personal residences),
- Or an individual who has earned $200k in income for the previous two years, or has a combined income of $300k for married couples.
Difference between Angel Investors and Venture Capital
If you are still unsure, you can read more about how to find investors to raise capital for your startup funding here.
What Percentage Do Angel Investors Take?
If you receive equity financing:
- Who’s investing? Do you want them on your team as stake owners?
- Do you have structures in place to comply with state and federal securities laws and regulations?
- How are you planning to manage periodic communication and consensus?
Learn about equity funding alternatives here.
If you receive debt financing:
- How is that debt going to be serviced?
- Do you have the structures in place to pay it back?
- Are you assuming insolvency risk per your cash flow projections?
If you receive SAFE financing:
- Who’s investing and are they adding any other value other than money to your business?
- What do you plan your next round of funding will be and at what valuation?
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How to Pitch an Angel Investor
Outreach Potential Investors
Share your Pitch Deck & Story: What you’ve been up to, what you are creating and why you did so. What motivates you and how are you showing commitment to the business?
Highlight the Problem in the Market: What’s missing right now for you to continue fully developing the business.
Showcase your Opportunity: The request should occur for the potential investor not as a command or a desperate necessity, but instead as a unique opportunity. You can include information you have gathered from past sales, the customer validation process, and market research.
Make a Direct Request for Funding: Ambiguity doesn’t serve any purpose. You want to make a straightforward request and let the potential investors know why you are contacting them.
Invite them as Heroes by being Investors: Humans are driven by other motivations besides money. When making your request appeal to their esteem needs for respect, recognition, status, and freedom. Encourage the angel investor to become the angel or the hero of your story.
Learn how CrowdCreate has helped other startups launch their project through investor outreach.
“I think a great brand story is what really resonates with the judges and audience so tell your story well. Be authentic, be yourself, and know your why.” Hector Saldivar comments on how his Brand Tia Lupita takes home the Grand Prize win at Natural Products Expo West Virtual Pitch Slam
Planning your Pitch: Depending on the time slot given, you might have between 10 and 15 minutes. An informational but concrete presentation is always preferred. Anticipate the questions or objections that your seed investor might have.
Address the crucial answers and the possible counterarguments that your investors can come up with. Here are the cornerstones a pitch deck should include:
Key Elements of a Startup Investor Pitch Deck
- Problem: What problem or gap did you identify?
- Solution: What product or service did you create? Can you provide a demonstration of the product or service?
- Past Performance or Traction: What have you accomplished in terms of sales or proof of concept? What have you learned from early versions of the product?
- Backers: Who is currently supporting your business?
- Market Overview: What are the market size, industry trends, and opportunities?
Vision: What do you envision for business development and long-term growth?
- Customer Profiles: Who are the people that love and back your business? Why do users care about your product or service?
- Business Model: How does your business generate, deliver, and capture value?
- Competition: Who are the key players in the market you aim to serve?
- Competitive Advantage: What is your startup’s key differentiator?
- Key Milestones: How do you plan to scale the team in the next 12 months?
Team: What relevant domain experience does the team have? Why is the team uniquely capable to execute the company’s business plan?
- Strategic Partners: Who can support your business fulfillment externally?
Current Offering and Use of Precedes: How much do you need and for what?
- Benefits: What are the compelling reasons that can attract your investors?
- Long-Term Opportunities: Unexploited markets? Other underserved customer segments? International expansion? What are other key features you plan to add?
Practice your Startup Pitch
- Practice Lots Beforehand: Having your pitch script down and feeling confident in knowing what you will say will let you focus on connecting with your audience.
- Anticipate the Unexpected: What questions can investors throw at you? Create a consistent plan to back up the information you are providing and foresee their reasoning for the adjacent questions that may arise.
- Polish your Performance: The business pitch involves more than the script. The investors might be looking at other elements of the presentation. As they say, the devil is in the details.
Being on time and having impeccable samples or product demonstrations could infer your professionalism. Recreating a confident tone, voice inflections, and eye contact are crucial.
Concise points on your slides, easy-to-grasp graphs, plus relevant and memorable imagery can put the cherry on the top of your business pitch. As you start to perform the pitch, pay attention to what works and what doesn’t.
If you are still unsure about how to elevate your pitch and excel in your investor outreach, you can schedule a consultation with Crowdcreate’s network of startup experts here.
Looking for a Angel Investors for your Startup?
What makes a great pitch?
Performing your Pitch
Team Work Make the Dream Work
Where to find angel investors?
Here are some ideas of where you may find more:
Looking for a Angel Investors for your startup?
There are millions of investors, including accredited investors, and qualified purchaser groups, that you can access through Crowdcreate.
Learn how CrowdCreate has helped startups raise capital, find investors, and market their startup project.