Presenting Your Private Placement to Angel Investors

Private offerings raise more money on an annual basis than public offerings.  There is a common misconception that public companies raise more money.  The reality is they do not, in part because of active angel investors.  Angel investment groups meet throughout the company in order to review business proposals, private placement offerings, and speak with entrepreneurs.  If you are looking to raise capital through a private placement, attending these meetings can help to get the ball rolling.

Here is the process for presenting to an Angel Investment Group or angel investors.

Submit an Application to Present

Most Angel Investment Groups or angel investors require you to complete a formal application.  This application contains information on your company, your financials, officers, and what you are trying to accomplish.  This is typically a paper application that reads like a mini offering statement.  They can be up to ten pages long and enable you to summarize your investment opportunity.  A committee will review your application and, if approved, invite you to present.  This process can take around 60 days so if you apply in November don’t expect to present until January.

Prepare Your Presentation

Each group sets a timeline for presentations.  They are typically under ten minutes long with a follow up Q&A.  You need to convey information in a clear and concise fashion. Many companies make the mistake of being too boring.  A room full of investors, listening to pitch after pitch, may find it difficult to get excited about your product or technology when you give them a million financial slides.  Break up your presentation with graphic images, video clips, customer testimonials, and product demonstrations.  If investors can hold something or interact in some way it will be easier for them to understand what your company does.

Prior to presenting evaluation the strengths and weaknesses of each member of the team.  Select individuals that can discuss your ideas with authority.  Don’t have the product engineer talk about finances or the CFO talk about design.  Select the right people to cover the areas they are experts in.

Financial Documentation

Investors want to know what is in it for them. Make sure that you have solid financial data to back up where your company is today, where you are going, and what it will take to get you there.  If you are trying to raise $1 million demonstrate how that money will impact the company and the profits that will be generated as a result. Graphs demonstrating growth and ROI can be helpful.

Company Valuation

Don’t overvalue your company.  This one mistake can scare off investors and prevent them from participating in your private offering. Remember that your company needs to be valued based on its performance today – not its performance after the investment.  Investors should get the benefit of the lift that is created by implementing their capital.

Private Placement Memorandum

Prepare your PPM and bring it with you.  Make sure that each one is marked and you have a register to document who they are given to.  If an investor wants more information you can give them a copy.  While each angel investor is supposed to be accredited in order to participate in the meetings, sometimes non-investors attend meetings.  Protect yourself by having each person sign a simple disclosure statement.

Follow Up

Get business cards and follow up with investors.  It takes diligent pursuit to secure investment so stay in constant communication as you take it over the finish line.

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