Often at the Gathering of Angels, a presenter will come fully equipped with his past several year’s financial records in excellent shape and QuickBooks prepared income statement and balance sheets. He will be knowledgeable and aware of his net profit and gross revenue for last 3 years and have professionally prepared projections for the next 1-3-5 years going forward. He will be aware of his gross and net margins on sales and have a clear and defensible valuation of his business using discounted cash flow as the valuation methodology. Any presenter with these financial documents in current form with proper security documents to receive an investment, will increase his chances of Angel funding by 75-90%. If the objective of a presentation to the Gathering of Angels is to raise seed and early stage capital, one would think that all requirements noted above would be in order and readily available to a potential investor.
But as you might suspect, it is often too rare case that all of the above is assembled and ready for the required due diligence before an Angel Investment. I have over the past 20 years seen funding after funding fall apart because the Entrepreneur was not prepared financially. Their presentation was all about marketing the product or service and the finance side gets cut short due to lack of preparation or being un-comfortable with the numbers or not having them at all. Any Angel Investor before he writes a check, will ask for historical financials and projections going forward. You as an Entrepreneur need to be prepared and armed for battle before you go on stage at GOA or any other finance forum.
Prior planning in the finance area is as important as a slick marketing niche, a strong team and passionate Advisors. Angels want the finance facts and want to know that you are prepared and accurate with projections. The use the later to determine the current valuation of your business and what equity stake they will offer for the capital you are seeking. Without proper historical and reasonable future projections of revenues, costs and net profit, no Angel Investor will step up and write you a check of any amount. All potential presenters at Gathering of Angels are coached to provide this and as prepared for finance questions from our Angels as marketing questions. Angels of today are highly focused on Exit Strategies and Liquidity events are the need to hear that you plan to not only return their capital invested in 2-4 years but return this capital with a high IRR (Internal Rate of Return). Investing in young seed and early staged companies is by nature high risk and demand a high rate of return inflation adjusted.
If the tools in your entrepreneurial tool box does not include a good understanding of finance and accounting, we suggest that you add a team member or finance consultant or CPA to assist you in full preparation before your presentation to an upcoming Gathering of Angels event. For more information, contact GOA Chairman and CEO Tarby Bryant 706-579-1080 or [email protected]