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7 Strategies for Attracting Angel Investors

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New Zealand’s start up landscape is growing. However, securing funding remains a major challenge for many of these businesses. Angel investors play a pivotal role in fostering innovation through the economic growth of start ups. This article will take you through seven strategies for attracting angel investors in New Zealand.

1. Understand New Zealand’s Angel Investor Landscape 

The first step to attracting angel investors is understanding who they are. The term ‘angel investing’ refers to those who provide financial backing to start ups in exchange for ownership. This ownership may be in the form of equity or convertible security (equity or debt, or a hybrid).

Angel investors are usually high net-worth people genuinely interested in supporting innovative business ventures. Often, they do not just provide capital to those they invest in. They may also provide:

  • valuable expertise; 
  • mentorship; and 
  • networking opportunities.

2. Have a Strong Business Plan

Angel investors carefully evaluate investment opportunities, so a well-crafted business plan is key to attracting investment. The business plan must provide a comprehensive understanding of your business venture, including your:

  • business model;
  • target market;
  • competitive advantage; and 
  • financial projections.

Ultimately, the business plan should instil confidence in investors that your start up is worth investing in.

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3. Develop a Strong Online Presence

A strong online presence is essential for attracting angel investors. This is particularly important in New Zealand, where the population is much smaller than in some other countries. This results in a more limited pool of angel investors.

Developing a professional website that communicates your start up’s mission and achievements is key. Doing so will increase your visibility to investors and indicate your credibility and commitment to transparency.

4. Participate in Networking Opportunities 

You should consider attending:

  • industry events;
  • pitch competitions; and 
  • networking sessions.

Each of these events will allow you to connect with angel investors. New Zealand has a network of angel investor groups dedicated to supporting start ups. Engaging with these networks will enhance your chances of attracting angel investors.

5. Show Your Potential

All investors, including angel investors, are drawn to businesses that demonstrate scalability and a degree of market traction. To help appeal to them, you should provide evidence of:

  • market research showing demand for your goods or services;
  • customer engagement; 
  • revenue growth; and 
  • a clear path to scale your business.

Concrete data in the above areas will help capture the attention of angel investors looking for solid investment opportunities.

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6. Build a Strong Team

Investors typically emphasise the strength of the team working in the start up they are investing in. A capable team can inspire confidence in investors and can indicate that your start up has the necessary skill sets to drive success. You should consider highlighting the skills and experience of your key team members in any pitches you prepare. This should demonstrate how their expertise positions your company for growth.

7. Offer Attractive Terms

There is more to attracting angel investors than financial considerations. However, offering attractive investment terms will, of course, appeal to them. It can be challenging to strike the right balance between protecting your interests in your business and offering equity. However, conducting thorough research on standards within the market will help you align your needs with the expectations of prospective investors. Seeking advice from financial advisors or your legal team can help you achieve this.

Key Takeaways

The term ‘angel investor’ refers to those who provide financial backing to start ups in exchange for ownership. Securing funding continues to be a major challenge for many businesses. As such, angel investors play a pivotal role in fostering innovation through the economic growth of start ups. Some key strategies to attract angel investors include: 

  • understanding New Zealand’s angel investor landscape;
  • having a strong business plan;
  • developing a strong online presence;
  • participating in networking opportunities;
  • showing your potential;
  • building a strong team; and
  • offering attractive terms.

If you need assistance seeking investment in your start up, you can contact our experienced business lawyers to assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today on 0800 005 570 or visit our membership page

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