Who Are You Mr. Angel?
If you are an entrepreneur seeking funds for your project, you have already read several articles, web blogs (here, here or here) or books about writing the perfect Executive Summary, Business Plan or Elevator Pitch. And you are now prepared to answer to all questions that investors could ask about your project such as the market size and the opportunity, the problem, your wonderful, unique and innovative solution, your competitors, the financial forecast … but it is not enough! You are not yet ready to present your project to a potential investor.
Of course, you may know that market research can help you to know and to understand better your customers. You ask them questions about what they prefer, what they use, why, when, where they use or work with a product and not with another … all these information help you to understand your customers, and the goal of market research is to offer the best product to fit the customer needs. If you are convinced by that, you should also consider your potential angel investors as a potential customer.
Disclaimer: I am not saying you to use your "BtoC salesman pitch to sell your "product" to an investor". He will hate that, and you will lose your credibility!
Yes, an angel investor is also a customer, but a very particular one. If he is seduced and convinced by your project, he will buy a piece of your company to become your partner! Consequently you have to know and understand him/her before marrying with him/her!
Do not be shy! Ask the what-who-when-where-why questions to your angel investor. He will appreciate that you take care about what he wants, what he is looking for and what he is expecting for your common future.
Hereafter, I propose some questions to ask directly to your potential investor, or indirectly by searching about him (thanks Google!):
Yes: The following questions remain fully valid for your family, friends and close relation!
No: How did you connected to him? Is he a member of an Angel Investment club or network? If yes, which one? You could find a lot of information available on their web site.
No: could you obtain the following information about him?
At seed-stage, early-stage startup, later-stage startup, established young company (meaning having revenues and positive cash-flow), or growth stage?
If hands-on: what is his function in the management of startups he has invested in?
If hands-off: nevertheless, is he willing to bring his support and help to your business development? If yes, does he have a particular skill or an active professional network that could be useful to you (IT, Finance, Marketing, Emerging Market …)?
Personal motivations to invest into a privately-held company
This list of questions is not exhaustive, and you should adapt it to your targeted investor(s). Furthermore, these questions are “rational” questions, and you may know that in marketing the emotions, feelings and instincts are more important in commitment than rational reasoning. So, if you can obtain from your potential investor an information about what he likes (food, drink, sport, hobbies, books, cinema, …), you could find a potential link between your project and his emotional brain (in practice, try to network with angel investors before officially asking them money).
To conclude, if you know the name of startups in which your Angel has already invested, try to contact the CEOs of these startups. Ask them 1000 questions about their fund raising (term sheet, due diligence, start-up valuation …) and their feelings about their Angel investor(s)! Are they happy with him (them)?