Angel investors are accredited investors who invest in high-potential early stage companies, allocating a portion of their total investment portfolios to provide emerging companies with seed and start-up capital through direct, private investments. Their goal is to achieve higher returns than the typical public markets provide. Most angels are active investors – who contribute their time and experience, as well as offer introductions to valuable contacts essential to the company’s success.
Below is a checklist that will help you to determine if an approach to GAN is appropriate for your company.
Management team: Your team is experienced, highly motivated, coachable, and realizes that some control and decision-making authority needs to reside with outside investors. You have sought out and recruited experienced individuals to serve on your Advisory Board.
Capital Requirement: You require between $200,000 and $500,000 (possibly more) to finance growth activities, i.e., recruiting key personnel, low-capex capital equipment, product development, building out the marketing and sales platforms. Founders/management already have significant cash invested, directly and via family/friends/business associates.
You understand how much additional capital is needed, and when, to progress to the next milestone.
Valuation: You understand that GAN members will invest only where they can earn an acceptable return for the risk they are taking, including business risk, illiquidity and uncertainty on exit potential and timing.
Technology: You have proven the concept behind your product or technology, which is supported by empirical data and/or credible third-party experts. You have built a comprehensive business plan to commercialize the technology.
Intellectual Property: You have taken precautions to protect your intellectual property via patent or trademark. You have determined, through exhaustive due diligence, that you are not infringing on patents or trademarks already held by other companies in your space.
Business Plan: You have spent considerable time to develop a comprehensive business plan that incorporates your key strategies for growing your business.
Financial Projections: You have developed reasonable financial projections, minimum 3-year forecast, based on logical & realistic assumptions.
Target Customer: You have identifiable customers in a distinct, and growing, market segment. There is a demonstrable and significant demand for your proposed solution.
Market: The projected spending in your product category is large and growing, you understand the market trends.
Competition: You have taken the time to properly identify potential competitors. You understand your company’s differentiation points, as well as your sustainable competitive advantage.
Sales Strategy: You have a plan to achieve widespread market penetration for your products and services efficiently (internal, direct sales or via external channel partners).
Profit Potential: You can demonstrate how healthy margins and consistent cash flow growth will be achieved.
Exit Strategy: You have thought out an exit strategy that will enable angel investors to generate an acceptable return within a reasonable timeframe.