Our “Ask ActSeed” team recently received a question from an entrepreneur who wanted to restart his company, find angel investors and be prepared to provide investors with the info they want. Here’s what we told him:
“The information below is an important part of the story that an investor will want to know for sure. It seems there are two parts to your question:
- How to find investors and
- What to present to them when you find them.
First, how to find them:
While there is no single “exchange” to find all prospective investors, there are many venues and approaches to finding them. The best is personal networking – talking to people you know and finding out if they, or someone they know, might be interested in your deal. The other end of the investor-search spectrum is to do Google searches and cold call banks and investment firms to gauge their interest. This is a very low probability approach. In the middle are communities like ActSeed that help bridge an entrepreneur’s lack of personal investor network with connections to investors and investor groups. Some communities are free (e.g. LinkedIn), but investors don’t dwell there as free sites attract half-baked deals and lots of “noise”. Some have membership fees (like ActSeed), are more concentrated, and have a higher quality. None can guarantee a successful deal, but the good ones can help you reach investors you wouldn’t find otherwise.
However, reaching prospective investors is only a part of the equation…
Most professional angel investors, VC and other equity investors see hundreds, if not thousands, of deals each year. Most invest in 2-6 deals each year. This leaves 97%+ of all deals unfunded. The remainder get bootstrapped (e.g. self-funded through self-directed IRAs, savings, etc.), through debt (e.g. bank loan) or likely shut down or go dormant.
The second part is what information you present to the prospective investor.
- If an investor believes the information being presented to them is incomplete, they will stop reviewing.
- If an investor doesn’t “get it” very quickly – i.e. understand the business opportunity before then – they will stop reviewing.
Through ActSeed, entrepreneurs prepare the information that investors want to see using a scored profiling system. ActSeed scores the “completeness of preparation”, not whether the idea is viable. ActSeed’s scored profile enables the investor to have a uniform comparative against other deals that signals risk of successful implementation of the business model. It’s kind of like a FICO score for early stage companies. Here’s a link to a brief white paper about the ActSeed profile and scoring process.
ActSeed’s 1-page “Business Snapshot” template is an excellent framework for an entrepreneur to introduce their business highlights on a single page; if an investor “gets it” on that first page, they will be much more inclined to read further. The scored profile and Business Snapshot are available in ActSeed.com. Once your ActSeed profile is complete, you can search ActSeed’s Investor Group for prospective investors within the ActSeed community. You can also share your ActSeed link with any investor outside of ActSeed.
If you’re interested, you can learn more about the ActSeed Entrepreneur Group and sign up if you want to use these resources by clicking here. You can also download a free copy of ActSeed’s “Business Snapshot” template when you complete your free registration on ActSeed.
There are other communities and resources available to you that will also extend your reach into the investor community. In addition to ActSeed, we advise all of our community members to also use other networks that can be helpful. The new business creation and small business ecosystem is too fragmented and dynamic to fit one application or one community; however, a balance of communities can together drive value to those who build companies.