Monday, December 3, 2012

The Funding Process Part 2

~ When Do Angel Investors Usually Invest? PART 2  ~

Yesterday, I talked about the first three phases when starting a new business that investors look for when considering to invest on PitchStreet. Today, I will talk about the last 5 crucial steps that you will go through when you have gotten their attention through your pitch and business plan.

1. The Application Form
Some angel investors have an application form that they will most likely get you to fill out, while other may just request an executive summary. It will be up to you to get all the mandatory documentations from the investor in order to finish a complete application. Most investors will have an application form on their PitchStreet profile that you can download.

2. Eliminating Investments
For about 1-2 weeks, investors will go through all their potential investments, and eliminate those  that fail to meet their minimum requirements. Any failed submissions, missing information, and poorly structured business models can jeopardize the chances of making it through this process. You may or may not be notified if your business passed.

3. The screening process
At this point, there is usually less that 25% of the applications that made it through to this level. Now for about 3 weeks, angel investors will request any updates that may have come up. They will request an inclusive business plan from you which you may need to further tailor to fit their best interest.

4. A Face-To-Face meeting
An entrepreneur is considered to be extremely lucky to be able to reach this point of the review process since obtaining angel capital is a competitive practice. During this stage, they will be invited to personally present their pitch and business proposals to the angel investors. Since Pitch Street is an online investment networking, usually they request a Skype meeting or phone call. After you present your pitch and made your presentation, they will ask you a series of questions that you must be prepared for. I will talk about these questions in the next blog. 

5. The Due Diligence
Once an investor is truly interested in your business plan, they will do an assessment of the business strategy. This is call a due diligence. This is the formal process of validating the representations you made in the business plan. In other works, an investment investigation.  Lawyers and accounts will be hired to preform company searches, background checks on the founds, reviews of historical financial states and tax filings. They will also determine how accurate and suitable the financial projections were in the business plan. This can go on for several months.

And there you have it, the last final steps you will go through before an Angel Investor will invest in your company. This should help you prepare yourself for when pitching investor on Pitch Street.

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