Raising Funds from Angel Investors in NYC
Startups need capital to turn their ideas into profitable businesses. Startups in New York City are in the ideal location when it comes to raising capital because NYC is home to some of the largest banks and venture capital (VC) funds in the world. On the other hand, some startups only need a small amount of investment capital that can be raised through family and friends or self-funding efforts.
When a company is too small for VC funding but too large to be bootstrapped or supported by family and friends, the answer typically lies in angel investors. Angel investors are high-net-worth individuals who invest their own funds in startups in exchange for an equity stake in the company. Angel investors often fund early-stage companies and provide mentoring to the founders. That is why they are called angels. Fortunately, NYC has many angels and angel groups.
To successfully raise money from angel investors, it is important to adhere to established best practices. Here are three of them:
Know What Your Angels Are Looking For
Angels want to know something about the integrity, commitment, and passion of the founders. They also want to understand the market being targeted along with its potential for growth. Additionally, they want to see a well-thought-out business plan and evidence that the company is beginning to achieve some of the plan’s goals.
Thoroughly Prepare for Your Pitch Meeting
To entice angels to invest, you will need a good elevator pitch along with a pitch deck that immediately grabs the angel's attention. A working model or prototype is excellent for demonstration purposes. Make sure you understand who you are pitching to by checking out the angels’ websites and LinkedIn profiles. You may be able to gain insight and get some advice from common LinkedIn connections. Be sure to practice your pitch in front of a live audience who will give you honest feedback and help you hone your delivery.
Do Your Due Diligence Early and Thoroughly
If you are successful at your pitch meeting, some angels may want to see your current financial documents in addition to your business plan. Therefore, it is important that you have all your financial documents up to date and available for review. You should also be prepared to answer any hard questions, such as your burn rate, the uniqueness of your intellectual property, your primary competition and the makeup of your team.
What Makes NYC Unique When Raising Money
New York City is a major international financial center that is full of angels and angel groups. Angel groups are simply groups of angel investors that pool their money and invest it as a group. In most cases, individual investors within the group are free to invest as little or as much money as they want although a specified minimum may be required to participate in certain ventures. Angel groups also make it easier for entrepreneurs to approach multiple angels at one time.
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