Investing in People
Angel investors have learned that investing in people is worth their time, effort and money. They are not in it, simply to be good Samaritans though, this is a business decision on their part, and annually they are reported to reject three quarters of the investment proposal’s they receive. Finding out why Angels investing in people take some proposals and not others is an informative study of how to make a good investment.
When investing in people what to Angel Investors look for?
First and foremost as with any investment, an Angel investor wants to see some indication of a solid return for their investment. In fact, they will want to see a better profit than they would see in the stock market. After all this is taking more of their time and effort to invest, so why shouldn’t they see a better return? A good rule for this type of investing is a return of seven dollars for every one dollar per seven years after taxes.
When investing in people what constitutes a good reason to invest?
Most angel investors are successful as entrepreneurs, and they didn’t get that way by making illogical or overly emotional decisions. There are three categories that have been set for the Angel investor—the economic, the hedonistic, and the altruistic.
The economic investor might want a different way of diversifying his portfolio. A hedonistic angel might simply want to be an instrument of change, while the altruistic angel wants to help the community or environment. The pitch someone would use if wanting to attract this type of investor would depend on finding out what type of investor they are. Check on their past investments to see this pattern and then pitch the proposal accordingly.
When investing in people what can help seal the deal?
Angel investors will be looking not so much for good intentions or enthusiasm, but for strength. Having an experienced and well led management team can make all the difference in attracting investors. Angel investors will want to see a solid skill level with a staff that can sell, market, manufacture, handle employees and do the accounting. In other words, good intentions will not make a business run or pay the bills on time. Serious, well trained people make a business run effectively.
When investing in people Angels will want to see a plan
Investors always want to see a business plan. They want to know what vision the company will have, and this needs to be detailed. Anyone trying to court an Angel investor should look for samples of Business Plans and go through their projections and carefully write one out. This needs to have all the necessary details of a valuable business plan, should look professional and be checked for spelling and grammar. They will also want to see that the business is set up and structured for investing. Investors will also expect a formal shareholder’s agreement with projections of their investments return.
Lastly, they will want to see how this project will allow them to be investing in people rather than just another company. They will want an opportunity to mentor and monitor this type of investment.