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Angel Investors: Doing the homework
In my previous post, I shared the importance of targeting the right angel investors in india for increasing the probability of raising capital. However, what is even more important is to do the proper background work before approaching investors for business startup fundraising. If we remember our school days, homework used to be the least liked activity for most of us. But reflecting now, we can recognize the importance of doing homework in achieving success. I will share three important tips.
1. Customize your communication: Let’s say you are raising about ₹1 crore. It is very unlikely that you might get the full amount from a single investor. You would have to approach a series of investors who can individually contribute small amounts of capital to complete your startup fundraising process. Therefore, we have to approach multiple investors to complete our fundraise. When we do that, it is important not to box all investors together. Raising angel funding is not like raising public capital where all investors are painted with the same brush – communications and materials differ among the different types of investors. The message that is being sent to each and every investor should be unique and highlight why your startup best fits their investment interests. No two investor messages should be the same. The one thing that easily puts off the investors is when they realize that the founder has done a shoddy cut+paste job in their emails or messages.
2. Highlight the rational as well as the emotional side of the opportunity: India's top investors are looking for handsome and attractive financial returns. Let us be very clear about that. However, given the multiple investment opportunities available, they tend to choose opportunities that also appeal to them on an emotional dimension. Are there some connections between the investors and founders? Same city? Same alma mater? Same organizations that they have worked for? Common friends, that could be found on social media? It is important to unearth such linkages and highlight the same in the initial messages. YNOS Angels provides enough background about the investor to weave the emotional connection.
3. Be upfront about telling how different the venture is: Investors want to be associated with something new and groundbreaking. It, therefore, becomes extremely important to highlight how different is your venture as compared to others in the marketplace. Identify start-ups that are similar to the venture for which you are raising funds and underline the gap that is being addressed. Fortunately, the YNOS platform makes such comparisons with similar start-ups very simple.
In the next newsletter, I will share some inputs on the mindset of the angel investor. Meanwhile, would be happy to hear your comments and suggestions on this article. Do mail me at firstname.lastname@example.org
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