Developing an effective angel investor business plan can be challenging for any entrepreneur, but especially when trying to put together a plan that appeals specifically to this unique market of investors. There are some critical key differences between a standard business plan and an angel investor plan you should be aware of. Note that angel investors will be seeking out new ideas from the best prepared entrepreneurs, so your business plan must be very clear and provide the right information in order to be successful.
In keeping with the guidelines from the Angel Capital Education Foundation (ACEF), a grass-roots angel investment educational organization, there are 4 elements that all angel investor business plans should include. Here is an overview to help your business plan take off.
Four Elements of a Successful Angel Investor Business Plan
- The Executive Summary
In this initial part of the angel investment business plan process, also sometimes referred to as a “pre-screening”, you will develop an executive summary for your business. Typically, this is a 5 to 12 page report of your business that reads like a business proposal – telling the background of your business, the reasons behind it, and what you intend to accomplish. According to Guy Kawasaki, a published venture capitalist, “Of the effort you put into write a business plan, 80 percent should go into the executive summary.” This is the first part of your angel investor business plan, so make it count!
2. The Data Analysis
From the moment you start formulating a new business idea, you should be spending a great deal of time researching, analyzing and gathering data about your competition too. Face it, you are the new kid on the block and everyone knows it. Get your information together and detail how you intend to back up your ideas with cold hard facts. Organize this data into easy to read charts and graphs, which will come in handy later when presenting your plan to potential angel investors (more on that later).
3. The Financial Forecast
In order to attract the right angel investors, a business plan must include clear and concise financial forecast data. Consider that most angel investors are looking for a reasonable turnaround of their invested money, with a significant revenue generation plan. Demonstrate in steps how much you need initially to launch your business, what the projected earnings are based on a test run, and what the next 1,2, 5 and 10 years will look like to investors. Without this element, you will have a difficult time trying to convince anyone to back your business plan.
4. The Presentation
It’s never too late to develop a killer presentation, as part of your angel investor business plan. This is when you put your ideas and business plan into tangible, visuals that illustrate where your business is headed. Start with the basics and create an interesting presentation that is both educational and innovative to peak the interest of your chosen angel investor group. If you need help in this area, there are plenty of angel investor networks that are eager to help you develop a presentation or allow you to sit in and watch how others do this.
Once you have included the above elements in your angel investor business plan, you are ready to start looking for investors to make your business dream a reality. Be sure to review more of the angel investor resources found right here at FindVenture for more helpful hints and tips.
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