What angel investors want to see in a startup’s business plan

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How to write a business plan: advice from the experts.

Read time: 6 minutes

  • Make it understandable to a non-specialist

  • Demonstrate clear evidence of demand and market penetration

  • Get feedback from a family member

  • Show you’re special – but you don’t have to be unique

Show off your personality

“Angels are investing in fairly early-stage businesses so the business plan is largely aspirations rather than accomplishments,” says Colin Mason, Professor of Entrepreneurship at the University of Glasgow’s Adam Smith Business School.

“This means that angels are investing in people rather than in the business – i.e. they are betting on the jockey rather the horse.

“A business plan must show the investor’s thinking and vision for the business.”

A business plan is as important as the pitching deck

“It is vital,” says Nick Lyth, CEO of Green Angel Syndicate. “In the first place, it is a description of where the business is aiming to go, and how it intends to get there. 

“In the second place, it exposes the quality of the management team, its professionalism, knowledge of its market, and attention to the detail required in order to succeed.”

Keep things concise

“There should be no more than 20 pages,” says Roderick Beer, Managing Director of the UK Business Angels Association. 

“Investors read a lot of business plans. If you can’t get across your idea in a clear and concise way in 20 pages then you might have bigger problems. 

“You can always use appendices to include more information in supporting evidence.”

Use plain English

“A business plan need to be dry and factual, but it also needs detail to signal deep understanding,” says Professor Mason.

“But if the startup is a technology business then the science has to be understandable to a non-specialist.”

Include the essentials

All business plans need the following sections: an overview; products/services; achievements or traction; route to market; the team; future milestones; financing requirements; financing projections and risk analysis.

“From an investor perspective the most important sections are probably the team, the traction, and the financials,” says Beer.

“Executive summaries in business plans aren’t that important because before an investor gets to the business plan they are more than likely to have looked through the investment deck which is in its own form a summary.”

Be positive, but realistic 

“Overpromising is a bad strategy,” says Simon Thorpe, Chair at Cambridge Angels. “You tend to come unstuck very quickly. The timetable is always longer than an entrepreneur thinks.

“The thing we know about projections is that they will be wrong. We don’t want to see ridiculous assumptions, but we want to see an understanding of the metrics of a business.

“It’s important to show off several scenarios for your business. Consider the best, medium and worst case scenarios.”

Show you’re special – but you don’t have to be unique

“Angels are not interested in ‘me too’ businesses,” says Mason. “They want to know what specific problem or ‘pain’ the business is addressing – and they are looking for ‘migraines’ rather than simply 'headaches' that can be solved by an aspirin.

“They want to know what's the competition and what the startup offers that is different from current solutions. But they are sceptical, so claiming uniqueness can be a turn off!”

Show the angels what you have already achieved.

“Clear evidence of demand and market penetration are very encouraging,” says Lyth. 

“For example, a company recently pitched with a product aimed at the mainstream grocery supermarket sector, and had already secured listings and endorsement from Tesco. This was great for us.”

Research your angels

“I recently had an approach from someone who had done all his homework on me, knew a lot about me and what I did, and that meant I was immediately much more interested,” says Thorpe.

“There was another business proposal that I didn’t like but what piqued my interest was that it was an area of interest to me. So we had a chat and he was able to come back with a proposal more relevant to me.” 

Neelam Patel, CEO at MedCity Angels, agrees: “It’s definitely worth researching your audience. What they are interested in, what have they invested in before and how much. 

“When in doubt, keep it general and accessible and go into details as and when asked.”

Check if the angel has special interests

As Lyth explains: “Any company approaching Green Angel Syndicate looks foolish if it does not recognise that we specialise in the fight against climate change and global warming. It must take account of this and aim to sell itself to us on the basis of its contribution to that fight.

“It simply looks incompetent and unprofessional otherwise. It discourages belief that it will be able to assess its customers effectively, and run a decent sales campaign.” 

Get a second opinion

“A family member can be really helpful for feedback before you show the business plan to an angel,” says Beer.

“An investor needs to be able to understand your business and how you intend to make a success of it and it needs to be easy to understand and easy to read and so testing it on a reasonably intelligent family member is a good way forward. 

“Certainly get someone that’s not on the inside of the business to review it because we often see cases where the founder can’t see the wood for the trees.”

Think like an investor

“The best business plans make you want to know more,” says Patel. “They make you wonder: what’s next, and keeps answering the questions popping into your head. 

“Being able to anticipate the investor’s next questions is a feature of a good business plan.”

Consider the impact of Covid-19

“Angels are still investing,” says Mason. “But many are preserving their cash for follow-on investments rather than making new investments. 

“Covid-19 has altered the sectoral preferences of angels – some are very open to businesses that are addressing opportunities that it has created.”

Thorpe says that the pandemic has not significantly altered his interests. “We’re still investing in the same areas. But the coronavirus has accelerated the adoption of technology, especially in health and education. 

“The other big theme is the growth of e-commerce. You don’t have to be an Amazon to be part of it. A lot of businesses out there support the likes of Amazon.” AI and Big Data, he says, are also key focuses for angel investors.”

Cambridge Angels has taken on 13 new companies since January 2020.

Raising Angel investment in the current landscape




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