For many entrepreneurs, locking down an angel investor or
two for their startup business is a necessity.
Considering the current state of the economy and the lack of jobs growth
over the past 8 years, plenty of aspiring business owners do not have the option
to obtain funding from a bank or family and friends. Because of this, it is important to have a
fluid and flexible business plan. The
overall structure and primary focus of what an angel investor is looking for
may vary from person to person, and an entrepreneur does not want to pitch a
movie idea to an investor with a business plan heavily focused on the film’s
financials when the investor they are selling to is more interested in the
content and the target market. This is
why research is vitally important. We
aren’t talking about research for your business plan. Of course, that is imperative to not look
like the idea was drawn up with crayon the night before the investor
pitch. The research we are looking at
here is the research of the investor. Preparing thoroughly prior to the pitch with
background information, previous investments, and more general details about
investment habits could help lock down the money needed to fund the startup he
or she dreams of. Let’s take a look at a
couple of more popular investors.
Mark Cuban is a tech entrepreneur most famously known for
being the outspoken owner of the Dallas Mavericks and repeated investor on
ABC’s Shark Tank. Additionally, he is
the founder of Broadcast.com, HDNet, Landmark Theatres, and Magnolia Pictures,
among others. Born in Pittsburgh, Cuban
caught the entrepreneurial bug while attending Indiana University-Bloomington’s Kelley School of Business. In the past 2
years, Cuban has invested in over 10 businesses, including Upstart, Flingo, Kisstixx, and more. Of
these startups, he has invested anywhere between $250k to over $10 million.
Cuban is a huge fan of investing in tech companies,
particularly ones that are content driven.
He has a keen focus on the fact that consumers will always be willing to
pay for high-end content as long as they appreciate the product. When focusing on investment opportunities,
Cuban looks at a couple of different things.
In his words, Cuban invests in “volatility”. He understands and appreciates the fact that
the markets fluctuate regularly, and because of that he looks for businesses
that are structured to be adaptable to the market and what consumers are
looking for. Because of this, he
considers it a non-negotiable piece of a business plan. A second thing that Cuban looks for in terms
of investing is the person he’s investing in.
He tends to look for intelligent people with distinguished concepts and
a drive for execution, with the execution piece being the most important part
of the plan. The reason being is that
many startup business owners don’t focus enough on the implementation of their
concept and instead simply attempt to sell the concept itself and how amazing
they believe it could be. The smart
investors that Cuban is attracted to put just as much, if not more time into
the overall strategy than they do of the product or service they are providing
consumers.
Another amazing angel investor is Ron Conway, considered by
many to be the “dean of angel investing in Silicon Valley”. A former salesman, Conway owns the venture
capital firm SV Angel based out of, you guessed it, Silicon Valley in San Francisco. Conway started investing
independently in 2005, and by 2006 he had already appeared on Forbes Magazine’s Midas list of top dealmakers. Conway is
known throughout the investment world for his crowdfunding strategies, in which
he would hold cocktail parties and invite large amounts of celebrities with
whom he obtains funding to invest in various startups. One thing is for certain…the man knows how to
network. Conway has invested in over 500
startups, including Google, Facebook, Foursquare, PayPal, Napster (whoops!),
Twitter, and more. Additionally, Conway
is known for truly being the backbone for the entrepreneurs he invests with. It often times upsets other investors, as
some believe his comments are unprofessional and unnecessary. Either way, as an entrepreneur, Conway is the
man you want to have on your side.
The primary thing that Conway and his group at SV Angel look
for in a business plan is Internet presence.
Without it, Conway is not likely to invest. The reason being, outside of the fact that
the company is based in Silicon Valley, is that they are low cost alternatives
to physical businesses and can reach a much, much larger market with much, much
smaller legwork. Think about it. The availability of the web has made it
tremendously easier to reach a much broader audience. Why not use it to its fullest advantages? Secondly is an important
piece to the business plan that may not even hold a single page in the actual
plan itself. That important piece is
referrals. Many entrepreneurs don’t
think about it, but networking can play such a huge role in the opportunity to
find an investor. Networking is such a
key piece to the puzzle because it shows that the opportunity is there. Many investors will only invest based on
referrals, and Conway seems to be one of those angels. Even if those networked connections don’t
have the funding or simply don’t invest at all, you never know who that
connection’s own connections may be. That
is why it’s vital to include networking as an invisible component in the
overall business plan strategy. Without
it, investors may never even take the time to look at a proposal or idea for an
amazing company.
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