5 Things Startups Can Learn From Angel Investors

Startups can learn a lot from angel investors, even if they’re not seeking funding. Feedback from angel investors can be valuable in helping startups meet their funding goals. Angel investors don’t just reject startups; they also provide explanations and offer suggestions for improvement. The Willamette Angel Conference, for example, charged a $100 fee for submissions and provided real feedback in return. Angel investors are individuals who invest their own money in startups and can teach startups a lot. It’s important for startups to listen first.

Here are five things startups can learn from angel investors:

1. Not all good businesses are good investments. Angel investors invest in startups that have the potential for a profitable exit, such as being acquired by a larger business or registering for public stock sales. Investing in a startup that becomes a healthy small business generating its own cash and profits can be a loss for investors if they are unable to sell their ownership.

2. Don’t focus on meaningless numbers. Some metrics, like the internal rate of return (IRR), have little relevance in the real world. Projection of high profitability into the future may not impress angel investors, as they prefer to see realistic sales forecasts that account for costs and expenses. Angel investors often prioritize high growth and deficit spending over immediate profitability.

3. Be cautious with big market numbers. While bigger markets are desirable for both investors and startups, projections based on small percentages of a huge market can be off-putting to angel investors. Instead of focusing on overly optimistic market projections, startups should present realistic strategies to capture a share of the market.

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By learning from angel investors, startups can gain valuable insights that can guide their decision-making and increase their chances of success.

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