5 Lessons Beginners Can Learn From Angel Investors
The developing technology has led to the preference for business models developed with innovative ideas. The preference for these ideas in business models has increased the number of entrepreneurs. When we say entrepreneurship, the first thing that comes to our mind is the concept of angel investor. While angel investors solve the problems experienced in financing, they also provide information about the sector.
Angel investors, who examine the projects presented to them and finance the projects they deem appropriate in return for a share, decide to provide this financing after a detailed evaluation procedure. In addition, the increase in initiatives means an increase in project alternatives for angel investors. So, are angel investors only financially advantageous investors?
As Bodrum Angels, in this article, we will cover the topic of “5 lessons for beginners to learn from angel investors”.
Lesson 1: Not all good businesses are suitable investments
People think that angel investors invest in startups that will become strong and independent businesses. Angel investors do not make money until their business idea reaches a certain point and generates income. Thus, investing in a startup that becomes a healthy small business, developing its cash and profits means a loss for them. If your business is good but does not generating income for the investor, it is a bad investment for them. Having an angel investor that finances you mean becoming a partner in your business.
Lesson 2: Don’t mess with meaningless numbers
Angel investors are unaffected by the possibility of making a profit of 30-50% or more on sales. They think that this does not mean that you can make a profit. It is a much more impressive solution to present your business idea which you do market research and support with a successful presentation, instead of impressing the investors with such figures. In addition, you should regularly check your income and expenses throughout your business processes and update your plans.
Lesson 3: You must be able to scale up
Scalability is described as the ability of a brand to run an increasing amount of business by adding additional resources to its production system. Brands that sell products are advantageous in this regard. For this reason, angel investors generally do not finance service-oriented ventures. Professional services such as lawyers, accountants, consultants, and design or product development brands are businesses that do not scale.
To scale your business idea, you need to pay attention to many criteria. These criteria are as follows:
- A successful team
- Marketing principles
- Choosing the right investor
- Keeping your business plan up to date
Lesson 4: You need a confidential significance
Entrepreneurs have a confidential significance that helps the brand develop and add value. You can get a patent for your business idea to protect it and prevent theft. Your patent is a value for your invention. It represents a difference in your business idea.
A patent is known as an industrial property right that protects entrepreneurs who own a particular innovation. A patent is given on the condition that the innovation is new and industrially applicable.
Lesson 5: Rapid growth costs money
Angel investors want to work with fast-growing brands. For this, more investment is necessary. Therefore, brands that can finance their growth are less attractive to finance continued development.
If you are working with angel investors on your venture idea, you must tell your story and persuade them. It is entirely up to you whether you can meet the criteria of a project they want to invest in.
As Bodrum Angels, we aim to reach the capital owners in Turkey, to create investment power to focus on mutually beneficial cooperation. For more information, you can visit our website or contact us.
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