Throughout the past year, I have noticed several trends while trying to raise capital. Angel investors, and venture capitalists for that matter, take forever to actually invest in your business. There were several times in my entrepreneurial career when I thought that I was guaranteed investment. I kept thinking to myself, I have a great concept, strong team and even a half way decent alpha build developed. Sadly, I still do not know exactly what it takes to grab an investor’s attention enough for them to actually pull the trigger.
I have come to realize that raising even a small amount of angel funding is a challenge. When I first started, I knew it was not going to be an easy task, but I never really understood how difficult it was.
Now, I know you are probably thinking…
Something just isn’t right with your approach or concept.
After having pitched to a few venture capitalists and seed accelerator executives, my partner and I were never told we had a bad concept. Most people, particularly Woody Benson from Prism VentureWorks, actually loved our idea. Our problem was that we just could not get enough programming traction behind our vision.
I still do not fully understand why my company, Oaysus, has not been able to raise capital, but I think it is just a matter of finding the right investor. Today, I spoke with Paige Rasid from the Connecticut Technology Council. She told me that there are not a lot of angel investments occurring throughout the state. This news is shocking because Connecticut just instituted a 25% tax credit for angel investments.
If an angel makes an investment of $100,000, they are entitled to receiving a $25,000 check in the mail from Uncle Sam.
Angel tax credits have been increasing throughout the country, yet investors do not seem to be taking advantage of the opportunity. If more investments were made, more companies would be starting and ultimately, more jobs would be created. The venture capital industry seems to be shrinking and as a result, they are also not as active as they once were. Venture capitalists also have a long courting process before even considering you for an investment. Is it possible that this is all a result of the recession?
Here is a video that provides tips for attracting angel investments.
Andrew,
To a degree, I think you are absolutely right. Investors probably are out there and ready to invest. I personally feel that it is just a matter of finding the right investor. You could have a perfect concept, but if the investor does not get excited about your business or industry, your job raising capital becomes much more difficult. Thus far, my experiences as a young entrepreneur have made it appeared that investments do not happen quickly, but maybe it is just because I am not a seasoned entrepreneur.
Thanks for the comment!
Jason
Hey Jason
Nice post. When you said “We could not get enough programming traction behind our vision…” – I'm wondering what that means? I'm not sure if you are suggesting that is the reason why you have not locked in the angel investors yet.
I think you are right that there has been a slow down in investments because of the recession but….and here's the interesting thing – they haven't stopped investing but they are seeing it as a buyers market – in this case, they are the buyer and they can afford to be picky about the investments they make.
I'd like to put an idea out there – Investors are STILL investing just like customers are still buying…walk through any mall and have the shoppers disappeared? No = they are walking from store to store as they always do and always will.
So how does this shopper parallel translate to investors?
They are BOTH looking for deals and are both driven by desire and scarcity…
Your job as the seller is to create desire, demand and imply scarcity when selling your business.
Just like a store which is constantly having a 'Sale' – no one likes to buy from a store that is desperate. You need to have peace of mind, confidence and create momentum when talking to investors.
Let me know if you would like to explore this idea further but it is absolutely possible to get investors in today's market…in fact, it could be arguably a good time to get investors as the entrepreneurs without real commitment drop out of the race…
Good luck and reach out if I can help.
Best
Andrew
http://www.TheFundingGuru.com
Hey Jason
Nice post. When you said “We could not get enough programming traction behind our vision…” – I'm wondering what that means? I'm not sure if you are suggesting that is the reason why you have not locked in the angel investors yet.
I think you are right that there has been a slow down in investments because of the recession but….and here's the interesting thing – they haven't stopped investing but they are seeing it as a buyers market – in this case, they are the buyer and they can afford to be picky about the investments they make.
I'd like to put an idea out there – Investors are STILL investing just like customers are still buying…walk through any mall and have the shoppers disappeared? No = they are walking from store to store as they always do and always will.
So how does this shopper parallel translate to investors?
They are BOTH looking for deals and are both driven by desire and scarcity…
Your job as the seller is to create desire, demand and imply scarcity when selling your business.
Just like a store which is constantly having a 'Sale' – no one likes to buy from a store that is desperate. You need to have peace of mind, confidence and create momentum when talking to investors.
Let me know if you would like to explore this idea further but it is absolutely possible to get investors in today's market…in fact, it could be arguably a good time to get investors as the entrepreneurs without real commitment drop out of the race…
Good luck and reach out if I can help.
Best
Andrew