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03-22-2011, 09:44 AM
Negotiating with a Business Angel Investor by Venture Giant
The internet is saturated with articles based on 'how to pitch your idea', how to draft, plan, practice and implement your pitch to perfection - ad nauseam. But there simply are not enough articles and resources on how an entrepreneur should negotiate with a potential angel Investor and the types of questions that should be asked. This can be a real disadvantage and Venture Giant intends to provide more articles on assisting entrepreneurs�� with the techniques needed in negotiating numbers and structuring deals with Business Angel Investors.
Before reading this article we strongly recommend reading the article: giving away equity in return for no investment
This article intends to set out the groundwork to understanding what types of questions you may wish to consider before deciding to accept or reject an investment proposal from a potential business angel investor. In fact, asking the right questions at the right time could end up benefiting you in one of three ways:
? Better terms - in term of investment vs. % share equity;
? Not-losing a deal - because you have incorrectly valued what the business angel can actually bring to the deal and are focusing only the capital investment;
? Walking away from the deal - because you have uncovered 'red-flags' or the investment deal simply does not feel right to you. Sometimes 'trusting your gut' and walking away from a deal can end up saving you more long-term.
With an impartial stance in mind, an entrepreneur must always remember that angel investment is a value proposition for both sides and past experience as well as success rates of a business angel investor must be valued and quantified by an entrepreneur looking to raise investment.
Valuing an investor��s possible future contribution to your company is no mean feat by any standard and a lot of it will rely on your own due diligence in combination with your intuition. The due diligence process must always begin from asking the right questions in combination with following up and checking up on them after your subsequent meetings with a potential angel investor. So the following checklist is by no means exhaustive but should set a good foundation for the type of questions you should be asking and considering.
? Business Angel Investor Checklist
To start with it is a good idea to ask a potential investor to sign a Non disclosure agreement (or NDA) before disclosing any sensitive facts and can do no real harm for any party. There is a modern school of thought that debates whether or not an NDA is an enforceable legal agreement or not, however, the fact remains that when an entrepreneur insists that a business angel investor or third party signs the agreement before entering talks,mens ferragamo shoes (http://www.ferragamoshop.org/), it sends out some very clear positive signals, namely:
? That you are serious about your idea or business.
? That you have made it clear, and in writing that you are now entering talks in areas that you feel are confidential and do not want the information that is discussed (or documents that you have disclosed) passed on without your permission.
? And, that best case, if a business angel investor (or third party) simply states that they do not wish to sign the NDA (for whatever reason they may give) then that will be a clear indication that you should be on-guard and less co-operative on the quantity of information you are asked to provide to the business angel. The usual reason for an angel refusing to sign an NDA is that they are already working in areas that conflict with the non-disclosure agreement; and that would be your first red flag that should seriously make you think twice on the amount of information you are willing to disclose.
Once the ��Non-disclosure agreement�� is signed, consider:
1) Has the business angel investor worked in your industry and if so what is his/her experience level?
2) What resources does the business angel investor already employ that can be plugged directly into your business?
3) What resources does the business angel investor have that you as an entrepreneur may be able to leverage? Example, access to office property, access to staff, existing know-how?
4) From the business angel investors past investments, how many of them are similar to your business and industry?
5) Could you leverage some of the business angel investor��s assets to directly benefit yours?
6) What experience does this business angel have in your industry?
7) Has the business angel Investor operated and exited from a similar business as yours? If so, what were the results and how much of it was as a direct result of this Investor? Would the investor be comfortable with you contacting the entrepreneur (s) involved in that business? If not, why?
8) How profitable are the Business Angels existing businesses? Asking this question and verifying this with companies�� house can be quite revealing.
9) How many investments have the business angel made in the past? This is a crucial question as it will always be a lot easier to deal with someone who has been an angel before, and has experience in angel investing over someone who has money to invest but has not invested in an entrepreneur before.
10) If the angel investor has made previous investments, would the business angel investor be willing to provide you with contact details of entrepreneurs that are working (or have worked) alongside the business angel, so you may contact them to discuss what sort of support level the entrepreneur has received?
11) What payback period is the business angel investor realistically looking at?
12) And finally, True Net Worth - Though you may never know the exact figure from your potential business investor, understand as a rule of thumb that a business angel investor should have at least 10 times the investment amount of liquidity available. So if you are asking for ��75, 000. 00,ferragamo sale (http://www.ferragamoshop.org/), the Angel Investor should have ��750, 000. 00 cash or assets that are easily convertible to cash over the short term whilst also being able to service their debts. This is not a question of wealth, but affordability!
A real business angel must always be seeking to win,ferragamo wallets (http://www.ferragamosale.net/), but more importantly,ferragamo handbags (http://www.ferragamosale.net/), also be willing to fail. Willing to fail can only come ultimately from affordability and the ability of being able to lose the invested money! A business angel, alongside their investment capital must provide strength to a business relationship and this strength can not come from someone who is in constant fear of losing their investment.
Though this list is definitely not exhaustive, it may potentially reveal ��red flags�� that you should be vary of, and is a good starting point to some of the questions you may want to ask in due course and part of your due diligence process before receiving investment from a business angel investor.
For More Information visit our website http: //www. venturegiant. com
.Topics related articles：
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salvatore ferragamo handbags 5875 (http://www.sharath.info/web/pg/blog/todssite1c/read/286455/salvatore-ferragamo-sale-3444)
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The internet is saturated with articles based on 'how to pitch your idea', how to draft, plan, practice and implement your pitch to perfection - ad nauseam. But there simply are not enough articles and resources on how an entrepreneur should negotiate with a potential angel Investor and the types of questions that should be asked. This can be a real disadvantage and Venture Giant intends to provide more articles on assisting entrepreneurs�� with the techniques needed in negotiating numbers and structuring deals with Business Angel Investors.
Before reading this article we strongly recommend reading the article: giving away equity in return for no investment
This article intends to set out the groundwork to understanding what types of questions you may wish to consider before deciding to accept or reject an investment proposal from a potential business angel investor. In fact, asking the right questions at the right time could end up benefiting you in one of three ways:
? Better terms - in term of investment vs. % share equity;
? Not-losing a deal - because you have incorrectly valued what the business angel can actually bring to the deal and are focusing only the capital investment;
? Walking away from the deal - because you have uncovered 'red-flags' or the investment deal simply does not feel right to you. Sometimes 'trusting your gut' and walking away from a deal can end up saving you more long-term.
With an impartial stance in mind, an entrepreneur must always remember that angel investment is a value proposition for both sides and past experience as well as success rates of a business angel investor must be valued and quantified by an entrepreneur looking to raise investment.
Valuing an investor��s possible future contribution to your company is no mean feat by any standard and a lot of it will rely on your own due diligence in combination with your intuition. The due diligence process must always begin from asking the right questions in combination with following up and checking up on them after your subsequent meetings with a potential angel investor. So the following checklist is by no means exhaustive but should set a good foundation for the type of questions you should be asking and considering.
? Business Angel Investor Checklist
To start with it is a good idea to ask a potential investor to sign a Non disclosure agreement (or NDA) before disclosing any sensitive facts and can do no real harm for any party. There is a modern school of thought that debates whether or not an NDA is an enforceable legal agreement or not, however, the fact remains that when an entrepreneur insists that a business angel investor or third party signs the agreement before entering talks,mens ferragamo shoes (http://www.ferragamoshop.org/), it sends out some very clear positive signals, namely:
? That you are serious about your idea or business.
? That you have made it clear, and in writing that you are now entering talks in areas that you feel are confidential and do not want the information that is discussed (or documents that you have disclosed) passed on without your permission.
? And, that best case, if a business angel investor (or third party) simply states that they do not wish to sign the NDA (for whatever reason they may give) then that will be a clear indication that you should be on-guard and less co-operative on the quantity of information you are asked to provide to the business angel. The usual reason for an angel refusing to sign an NDA is that they are already working in areas that conflict with the non-disclosure agreement; and that would be your first red flag that should seriously make you think twice on the amount of information you are willing to disclose.
Once the ��Non-disclosure agreement�� is signed, consider:
1) Has the business angel investor worked in your industry and if so what is his/her experience level?
2) What resources does the business angel investor already employ that can be plugged directly into your business?
3) What resources does the business angel investor have that you as an entrepreneur may be able to leverage? Example, access to office property, access to staff, existing know-how?
4) From the business angel investors past investments, how many of them are similar to your business and industry?
5) Could you leverage some of the business angel investor��s assets to directly benefit yours?
6) What experience does this business angel have in your industry?
7) Has the business angel Investor operated and exited from a similar business as yours? If so, what were the results and how much of it was as a direct result of this Investor? Would the investor be comfortable with you contacting the entrepreneur (s) involved in that business? If not, why?
8) How profitable are the Business Angels existing businesses? Asking this question and verifying this with companies�� house can be quite revealing.
9) How many investments have the business angel made in the past? This is a crucial question as it will always be a lot easier to deal with someone who has been an angel before, and has experience in angel investing over someone who has money to invest but has not invested in an entrepreneur before.
10) If the angel investor has made previous investments, would the business angel investor be willing to provide you with contact details of entrepreneurs that are working (or have worked) alongside the business angel, so you may contact them to discuss what sort of support level the entrepreneur has received?
11) What payback period is the business angel investor realistically looking at?
12) And finally, True Net Worth - Though you may never know the exact figure from your potential business investor, understand as a rule of thumb that a business angel investor should have at least 10 times the investment amount of liquidity available. So if you are asking for ��75, 000. 00,ferragamo sale (http://www.ferragamoshop.org/), the Angel Investor should have ��750, 000. 00 cash or assets that are easily convertible to cash over the short term whilst also being able to service their debts. This is not a question of wealth, but affordability!
A real business angel must always be seeking to win,ferragamo wallets (http://www.ferragamosale.net/), but more importantly,ferragamo handbags (http://www.ferragamosale.net/), also be willing to fail. Willing to fail can only come ultimately from affordability and the ability of being able to lose the invested money! A business angel, alongside their investment capital must provide strength to a business relationship and this strength can not come from someone who is in constant fear of losing their investment.
Though this list is definitely not exhaustive, it may potentially reveal ��red flags�� that you should be vary of, and is a good starting point to some of the questions you may want to ask in due course and part of your due diligence process before receiving investment from a business angel investor.
For More Information visit our website http: //www. venturegiant. com
.Topics related articles：
ferragamo 1638 (http://myjoojootablet.com/forum/index.php?topic=449745.msg649792#msg649792)
salvatore ferragamo handbags 5875 (http://www.sharath.info/web/pg/blog/todssite1c/read/286455/salvatore-ferragamo-sale-3444)
ferragamo shoes mens 5015 (http://jiayinren.com/bbs/forum.php?mod=viewthread&tid=84702&extra=)