12 things angel investors look for in a startup

What are some of the key things an angel investor may be looking for when evaluating your business? Here are the top 12 things they will be looking for. This can be relevant to any investor however each individual will have a different perspective based on their knowledge and experience.

From a business perspective

1. Clarity: You can clearly explain your business;

2. Credibility & edge: You have a strong team that gives you an edge over competitors;

3. Passion: You care deeply about the problem you’re solving and you have an inspiring and unshakable vision;

4. Focus: You can showcase possibilities of growth whilst staying focused on bringing one thing to market at a time;

5. Proof: You have proven your hypothesis, and are seeing the beginnings of traction or product/market fit;

6. Route to market: You have figured out options for a route to market and how much of the market you can potentially acquire;

7. Business Model: You have figured out an initial business model that explains how your business will make money;

8. A thought-out plan: You have a planned roadmap of activity, key hires, sales strategy, and you know how you will spend the investment money.

From an investment perspective

1. High return on investment potential: Does your investment opportunity have the potential to make big monetary returns?

2. Tax Benefits: Is your investment eligible for SEIS or EIS tax relief?

3. A good fit for their portfolio: Does your business align with their investment thesis and doesn’t cause an imbalance for their existing portfolio of investments? i.e if they have already invested in a pet food company, they may not want to invest in another pet food company as it’s good practice to spread your risk amongst different sectors.

4. Something that aligns with their philosophy, experience, values or simply piques their interest.

Note that a few elements, particularly the last two, are very personal to the individual. So, having some background on your investor helps to give you some context on whether they will be interested in your business or not.