There are lots of angels, angel groups, and Venture Capitalists listed on websites on the internet, but many have tight investment criteria. Most invest in only a specific range of deal sizes. Many are specialist by industry sector and location. Some are always looking for a strong patent portfolio, or other protectable IP. If I am raising £50k for a new social media website, any time spent talking to a specialist biotech VC who typically invests £10m at a time is likely to be wasted. Fortunately, it isn’t too hard to find out who is worth talking to.
Looking at the news releases, current portfolio of investments and career history of the investing team helps me to understand whether an investor is likely to be interested in a proposition. Some even have a statement of what they are looking for on the “About” page of their website!
Another potential waste of time is pitching to investors with no cash. Very few investors websites say “we don’t have any money right now” but the reality is that many of them should! Especially at the moment there are a number of investors who have completely invested their fund (they still have an active portfolio of investees), or who need their money to support additional rounds in existing investments. They may look “open for business” but not actually have cash for new propositions. Networks can be important in understanding who has money and whether they are investing, as can direct questions at initial meetings.
Exits are worth looking at too. Especially for Angels and Angel Groups exits may be a source of cash for re-investment, and investors flushed with the success of recent exits may be keen to re-invest some of their earnings. Exits can also be a positive indicator that an investor has helped to build a successful company and knows how to sell it – something I hope he will do with my proposition too in due course!
In summary, look at
- Investment criteria
- Availability of cash
- Track record