Idea | Usman Sheikh

Source #3: Angels

“I want to work for a company that contributes to and is part of the community. I want something not just to invest in. I want something to believe in.” Anita Roddick

Angel investors consist mostly of high net individuals. They have domain expertise in some specific area and are very well connected. Once a company decides that it wants to take itself to the next level, angel investors are usually a good first step. At this point, the advice I give startups is , find an angel investor who has domain expertise in their particular industry or field. They become an excellent reference point for you to get connected, gain exposure and set yourself up for a much larger round of funding. To begin the search for an appropriate angel investor you should;

Prepare a formal business plan with an attractive executive summary.
Get your elevator pitch and presentation fine tuned.
Preferable to have a working prototype or demo of your product/service.

Angel investors usually fill the void for investments ranging from $100k – $1m. Assessing your companies valuation (This process will be talked about in a couple of weeks) is an essential step before pitching to them. This will help you to gauge how much equity you will have to give up to raise the amount of capital you require. Armed with this information you are ready to begin your search. If possible get a referral from someone who may have contact with an angel group or the angel him/herself. This will increase the likely hood of getting an appointment. Without a referral, search for prominent angel groups in your city or country. Such as BANSEA in the SEA region.

Angel investors provide startups with flexibility which is not available in venture backed companies. Angel investors provide you with the ability to sell or buy your stock from them during the initial stages. This gives cash strapped founders the ability to benefit along the way. This flexibility also brings with it some unique challenges. Angels can be a lot more intrusive than venture capitalists. Some take advantage of cash strapped founders by increasing their shareholding at the expense of the founders and may even take an active role in the company which may lead to undermining the founders authority. Some ways you can guard against this scenario’s is to have a lawyer draft out a comprehensive agreement. In this way you can ensure that your rights remain guarded and you will not be caught off guard by the angels contract agreement terms. Making sure both parties understand the agreement fully before entering into this partnership is vital.

This is the stage in a startup venture when your dreams begin to take shape. When an angel shows interest don’t reach the conclusion that it is a done deal. Continue to market yourself, this will raise your companies exposure level. With a greater level of exposure you will have considerable leverage to ensure that you get the better end of the deal. Rushing this stage is never a good idea, you are selecting a partner who is essential in your journey to an IPO or acquisition stage. Keep your eyes and ears peeled and once you get that “right” feeling just go with it.

Eureka!

“If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.” George Bernard Shaw

A lot of people usually ask the question “How did you ever think of this concept?” or sometimes you are the one wondering “I wonder what the guys who created YOUtube were thinking about?”. These are very good questions to be asking, in fact if you are part of a group of people asking questions like this you are already well ahead of most of the population. The reason being, that you are beginning to question the world around you. I feel this was a major breakthrough for me, when I started questioning things and not just accepting them for what they were.

All ideas usually address a certain customer need or add value to a certain process to make it better. This is how I remember starting up my first business in university. I had a friend who was part of the student union and talking about a tender which he needed to get quotes for. It was for the basic printing of name cards. My partner and I decided that if we could get the basic machinery necessary we could provide a much greater value added service. This led to the launch of our first design and print company. In the years to come we helped them with a range of projects and being physically on campus we started to get orders from a lot of other student-based organizations. If you have identified a customer which has a current need you can fill and add extra value to it, you are well on your way to developing something which has great potential.

Open your eyes to the world around and be on the constant look out as to where there is a need and value can be created. Once you have got a vague idea that is the part which separates the doers from the talkers. This week I am going to take your through my thought process of how you can take a simple concept and rigorously test it to see if it can be made into reality. The process which I use is a mix of experience and lots of helpful tips I have got from books such as Innovation – Curtis Carlson, Purpose – Nikos Mourkagiannis and Execution – Bossidy Charan and Burk.

However the most important part of the process is the one discussed in this post. Identification of the idea and a deep commitment with enthusiasm about it is a defining part of this process. Without it I feel the spark is not there, so if you have come up with an idea then you should seek to discuss with as many people as possible. Talking with individuals with experience in that industry gets you insight which is priceless. Enthusiasm, passion & a constant interaction with others about this idea is vital to its success.If you are asked to join a team and be part of developing a concept then do as much research into the idea as possible. Think about different angles and permutations that it could work in. You have to be excited enough and get your blood flowing, then get your team together and………………now you are ready!