Commonly asked questions

How much capital can I expect to raise through Angel Investment?
How much emphasis do Angel Investors place on the Management Team?
What should I focus on in an investment proposal?
What is the role of a Non-Disclosure Agreement?

How much capital can I expect to raise through Angel Investment?

The average size of an Angel Capital investment in a round is between $350,000 – $400,000 in Australia. This figure obviously will vary but it is consistent around the world. The amount of capital that can be expected in a round is dependent on the value proposition promoted. An individiula company may need to seek several rounds of investment to achieve their final business goals.

How much emphasis do Angel Investors place on the Management Team?

Angel Investors recognise that the founder and management team are the critical factors in delivering on outcomes in any business. There is a continual debate about whether to “bet on the horse or the jockey”. For Angels it is about both. There must be a significant and unique value proposition that will give you a distinct competitive advantage. However the best technology in the world cannot be guaranteed to succeed without the passion and drive of the founder and the management team. Someone has to live that business and drive it forward. The investors will need to have confidence that founders and management can deliver on that and that they are prepared to develop a strong relationship based on trust.

One key factor is whether the team is mentorable. If a founder is not prepared to listen and learn from experience, it is not likely to be a comfortable relationship and investors may walk away.

What should I focus on in an investment proposal?

Angel Investors around the world use a software platform called Gust (www.gust.com.au). Gust is used internationally by all Angel Investor Groups as their deal management software. They now offer a select service for entrepreneurs as well. If you use this platform, it is going to help you be ready to have in place the factors that you should focus on. These have been captured on several of Angel Groups side as well. Click here to view a check list.

Pitches should

  • Focus on the value proposition for the business and for the investors
  • Demonstrate how you are going to scale revenues and business value as fast as possible
  • Don’t have a lifestyle business – ensure it has a unique competitive position – something that indicates why you will succeed over anyone else
  • Identify the exit strategy
  • Know how much money total you are going to need to deliver the returns to investors.

What is the role of a Non-Disclosure Agreement?

Non-disclosure agreements are also often referred to as Confidentiality Agreements. Such agreements are used as common practice in business discussions to protect the confidential information of a business. Confidential information is that which can include but is not limited to financial information, business relationship and contract information, intellectual property information, personal information etc – it is that information that is unique to your business and on which you are basing your business advantage. Any investor will want to see that you have taken steps to protect your confidential information to maintain your competitive position and to help your business become a success. This will be part of their due diligence process should discussions progress to that stage.

However, to even get interest from a potential investor, you should have an “elevator pitch” (covered in another FAQ above) that does not include any confidential information. No investor will sign a CDA/NDA before they have heard an initial pitch. You must be able to open discussions, describe your business with your elevator pitch saying why you are going to succeed above all others, without the need to sign a CDA/NDA. Investors will only sign CDA/NDA when discussions have progressed to a stage where they enter a due diligence process. This is when you can be confident that the investor is becoming serious about considering an investment. This of course, does not mean that any investment is guaranteed, as there are many factors which cause an investor to decline to proceed.

Please consult web sites of various Angel Groups, links to all formal groups affiliated with AAAI and operating under our Code of Conduct are available to the right of this page via “Find your local Angel Group”, to determine the policies adopted by each of those groups with respect to CDA/NDAs.