BusinessWings: How do you go about identifying, contacting and pitching to business angels?
Nathalie Gaveau: I was lucky because I was able to get access my current investors (including Carrefour’s Daniel Bernard, the BBC’s Lord Birt and Eidos’ Ian Livingstone) through my own personal network. However, there are a number of tactics and means to identify and contact the right people.
First, it’s necessary to identify the right people with the right experience. Some people think that money is just money but the right investors can bring much more to the table including valuable experience and contacts.
Look at what the investor has invested in and worked on previously as many tend to invest in specific industries or vertical sectors. Depending on the specific requirements, it may make sense to approach several business angels that co-invest together as well.
Subsequently, once the right people have been identified and researched, you can make contact through a variety of ways, including social networks such as Linkedin or even Twitter, or make introductions at business events.
Some relevant events for tech entrepreneurs, for example, may include Open Coffee Club meet-ups, and Seedcamp events. Plus, there are business angel networks all around the world – like London Business Angels in the UK.
Once you actually make it to pitching your idea, prepare a short 10-20 slide pitch with all the essentials of your business idea, a prototype and key figures around how you’re going to monetise
BW: Once a meeting with a potential investor is arranged, how do you actually secure investment?
NG: Once you actually make it to pitching your idea, prepare a short 10-20 slide pitch with all the essentials of your business idea, a prototype and key figures around how you’re going to monetise. There are tons of guides and examples online.
No matter what you do, apply the KISS principle – Keep it Simple Stupid - to everything, including legal structures to shareholder agreements.
You may want to consider having the investor sign an NDA (non-disclosure agreement), just to protect your idea. While institutional investors tend not to like signing NDAs, individual investors are more likely to – especially if they are interested in working with you.
Also, don’t forget to inform the investors of the different financial incentives that are also available to them. For example, the Enterprise Investment Scheme (EIS) in the UK, which provides tax reliefs to investors.
BW: How do you decide what amount of investment you should initially try to secure?
NG: With respect to the amount, you simply look at what resources you need in order to grow your business into a profitable one; infrastructure, people, etc.
However, I highly recommend entrepreneurs secure enough funding for 18 months rather than 12, as securing investment can take from three to six months and you want to be able to really concentrate on developing your company without any added stress.
BW: Aside from seeking funding from business angels, what other financial resources are there?
NG: There are lots of different options, including raising ‘love money’ from friends and family, public funding options and even crowdfunding platforms like Kickstarter. I’m a fan of all of these methods – though I have never tried funding a company with a crowdfunding platform.
I have definitely raised ‘love money’ and, for my previous company, PriceMinister, we also received government support for R&D in France.
There are some people that also suggest boostrapping as much as possible in the initial phases of a company. While this often means that the entrepreneur will retain maximum control over his business, it can be incredibly difficult for the entrepreneur.
In addition, I think it is important to bring in people who believe in the business and the vision from the start. If in the end you are really unable to get anyone to invest, it may be best to reconsider your idea and make some modifications to your original plan.
There are other ways that entrepreneurs can also bring down their costs, like with an incubator. Entrepreneurs should be careful with this as some – not all – incubators can end up taking a disproportionate amount of the company in exchange for the services and financial relief they provide.
BW: How can you ensure a good relationship with your investors and a continuing contribution to your business’ development?
NG: About twice a year, I like to organise an investor catch-up. This is where I invite all our investors to the office to meet the team and get completely up to speed on the progress we’ve made.
However, some investors are much more involved and act as regular advisors on a variety of different topics. Structuring a strategic committee that can later evolve into a proper board is a good way to organise efficiently in early stages.
All in all, I recommend that all entrepreneurs try to bring on board at least one solid business angel to help their company from the beginning as they can help speed up the process of taking the idea from conception to a profitable and successful business.