How to Write a Business Plan for Angel Investors

If you are starting a new business or expanding a current business, angel investors will be an important source if you are seeking funding. Angel investors are individuals or accredited investors who invest their own money in businesses they believe have a high potential for success.

Do Angel Investors Need a Business Plan?

The vast majority of angel investors will want to see a business plan before they invest any money in your business. A business plan is a document that outlines the goals and objectives of your business, as well as how you plan on achieving them.

While you may be tempted to skip this step, it is important to remember that angel investors are not just looking for interesting businesses;  they are also looking for businesses with a compelling business plan and a team that can execute on it.

 

Writing a Winning Business Plan for an Angel Investment

To attract angel investors, you will need to write a solid business plan that outlines your company’s potential for growth and profitability. The following sections should be included in your business plan:

Executive Summary

The executive summary is the most important part of your business plan, as it is the first thing that angel investors will read. This section should give a brief overview of your business, including your company’s mission statement, products or services offered, target market, and how you plan on making money.

Company Overview

This section should provide more detailed information about your company, including your company history, business model, and any unique selling points that make your business stand out from the competition.

Industry Analysis

In this section, you will need to provide an overview of the industry you are in, as well as how your business fits into the industry. You will also need to discuss any trends affecting the industry, and how you plan on taking advantage of them.

Customer Analysis

To attract angel investors, you will need to show that you have a clear understanding of who your target customers are and what needs they have that your products or services will meet. In this section, you should outline your key customer segments and their core needs and define the size of your target market.

Competitive Analysis

In this section, you will need to provide an overview of your competition and how your business plans to differentiate itself from them. You should also discuss any competitive advantages you have, such as a unique selling proposition or a first-mover advantage.

 

 

Marketing Plan

Your marketing plan should outline how you plan on reaching your target market and promoting your products or services. This section should include information on your marketing strategy, advertising and promotional budget, and sales forecast.

Operations Plan

This section of your business plan will outline how your business will be operated on a day-to-day basis. It should include information on your manufacturing process, distribution channels, inventory management, and warehousing.

Management Team

In this section, you will need to provide an overview of your management team and their qualifications. You should also discuss how your team is structured and how they plan on working together to achieve your business goals. Many angel investors will want to see that you have a strong and experienced management team in place before they invest.

Financial Plan

The financial section of your business plan is one of the most important parts, as it will show angel investors how you plan on making money and how much return they can expect on their angel investment. This section should include your income statement, balance sheet, and cash flow statement.

Appendix

The appendix of your business plan should include any additional information that you think would be helpful for angel investors to know, such as market research reports or detailed financial projections.

By following these tips on how to write a complete business plan, you can increase your chances of attracting the funding you need to start or grow your business from angel investors or angel groups.

 

What Do Angel Investors Get In Return?

One of the most common questions entrepreneurs have when seeking angel investment is: “What do angel investors get in return?”

In general, angel investors expect a higher return on their investment than they would receive from traditional investments in stocks and bonds. By getting a percentage of equity in your company, a percentage of future profits, or a combination of both, they can possibly earn larger returns, which are commensurate with the increased risk of investing in a nascent, non-liquid company.

Angel investors also typically get preferential treatment when it comes to items like board seats and veto rights. This means that they may have some say in how the company is run and can veto decisions with which they don’t agree.

For these reasons, it’s important to make sure that your business plan is compelling and shows how you plan on generating a large return on investment for your angel investors.