A new business depends primarily on the management skills of the entrepreneur. The most successful entrepreneurs manage their resources by minimizing the amount of capital needed to start and grow their business. Angel investors want all of their investment put directly into making the business grow in order to insure a high rate of return, which should be about 20% to 30% per year on the invested amount. It is often a mistake among entrepreneurs to think that there are no competitors that operate in a similar capacity to their business, and this should be shown in your business prospectus as it relates to starting a company with money from an angel investor. Equity will almost always be required as a negotiating tool as it relates to working with a private third party funding source.
The details of how you will accomplish the goals of your business are described in your business overview documents. Entrepreneurs often have the misconception that a new business idea must be unique in order to be financed by an angel investor. However, this is usually not the case as the most important thing about your business is that it is economically viable. An expanded executive summary can be used to attract the attention of potential investors, and this should be shown within your new business plan. Read More...