Impressing Angel Investors: The Five Ps

In our latest fundraising top tips article Xavier Ballester, Director of Brokerage at Angel Investment Network, gives us the lowdown on the 5 Ps of impressing angel investors.

Fundraising in 2023 is tough. With a re-evaluation of so many businesses and investors being far more cautious about deploying capital, startups need to change their strategy to succeed. However, with 15 years of experience in helping startups raise investment one thing I know is how adept startups are at adjusting strategies in the face of ever-changing market dynamics.

Based on hundreds of conversations over the past few months, I believe there are five Ps of impressing angel investors in the present climate. Follow these and you will significantly enhance your chances of securing funding for your startup.

1) Pitch

In a world where investors are bombarded with pitches, it is crucial to make yours stand out from the crowd. Start with a blank piece of paper and distill your pitch into a concise paragraph. Ensure that your pitch clearly articulates the problem your startup aims to solve and how your solution stands out.

If you think of some of the best businesses out there they can be so simply distilled in a few words. For example geocoding system What3Words, who we helped on their initial fundraise – ‘the simplest way to talk about location’ or Monzo ‘Your money made easy’. Always go for the short to grab the investor’s attention.

2) Presentation

Once you have the opportunity to present your pitch to investors, it’s time to create an impactful pitch deck. Your pitch deck should have a clear narrative that captivates the investors’ attention. Focus on highlighting the core product and its unique selling points compared to competitors. Additionally, aim to keep your pitch deck concise, ideally limiting it to around 10 slides. Remember, if your pitch extends beyond twenty minutes, investors may lose interest.

Having worked with Fourth Wall who are the producers of the hit kids’ cartoon “Milo the Cat”, they were clear on the size of the market, the traction they had achieved so far and comparable success stories on the same channel such as Peppa Pig in a clearly laid out and attractive deck. This really won over investors.

3) Proof

In today’s market climate, evidence of traction is paramount. Investors want to see that your startup has already achieved some level of success and has a clear pathway to further growth. It is essential to demonstrate tangible metrics, such as user acquisition, revenue, or partnerships, that validate your startup’s potential. Furthermore, highlight the relevant experience and expertise that you and your founding team possess within the industry, as it adds credibility to your venture.

A great recent example we worked with would be energy efficiency platform BOLDR. In a beautifully laid out pitch deck focusing on striking visuals and standout numbers they demonstrated rapid early growth in just a few months of trading, good profit margins and a runway to expansion. The founding team had years of relevant experience in the Internet of Things and they boast a strong advisory team. This is the proof investors are looking for in today’s market.

4) Price

As businesses reassess their plans and funding options, it is crucial to set realistic valuations. What might have been an 8x valuation last year may only be a 5x valuation now. Investors appreciate valuations that are grounded in factual analysis rather than inflated expectations.

By adopting a rational approach to valuing your startup, you are more likely to attract prospective investors who recognize the true potential of your business.

5) Passion

Investors seek founders who are deeply passionate and committed to their startup’s success. They want to see that you and your team are willing to work tirelessly, make sacrifices, and persevere through challenges. Displaying genuine enthusiasm for your venture can be infectious and inspire confidence in investors. Let your passion shine through in your interactions and demonstrate your unwavering dedication to achieving your startup’s goals.

In summary, impressing angel investors revolves around the five Ps: pitch, presentation, proof, price, and passion.
– Craft a compelling pitch that clearly conveys the problem and solution.
– Create a captivating presentation that highlights your core product and its differentiation.
– Provide concrete proof of traction and outline the experience of your team.
– Make sure you establish a realistic price in your valuation that aligns with market conditions.
– Finally, showcase your passion and commitment to your startup. By focusing on these aspects, you will significantly enhance your chances of successfully raising funds.

Best of luck with your fundraising endeavours!