The industry experience of your management team has a significant influence on the investor’s perception of the viability of your business proposal. It is very important to check for contradictions in your business proposal that could be challenged.
It’s important to consider the fact that most angel investors prefer to invest in industries that they have considerable knowledge and experience in. They also prefer to invest with companies, especially early stage companies that have a management team with industry experience.
It’s a fact that early start ups are a risky venture and without the experience it is even riskier but there is something you can do to improve your chances of succeeding:
1. You can enhance the experience and credibility of your company’s management team by building up a strong board of directors or advisory board.
How will this help?
If you have well respected people on your board of directors or advisory board that believe enough in your company to put their name behind it and spend their time to help out, it will impress an investor that you are on the right track.
How do you do it?
You want to identify people that can provide value to the company in either the experience they have (i.e. if this is your first time as CEO you would want to find somebody that is an established CEO) or in the contacts they have i.e. find somebody that is well respected/connected in the industry your company is targeting.
The big advantage of having these types of people involved with your company is the ability to consult with them on issues/problems that your company may be facing. They are also an excellent resource to access for their contacts and networks who can open doors that otherwise might not be available. Another benefit is that it will help out the due diligence process with investors.
2. You can also enhance the experience and credibility of your management team by inviting your angel investor to participate in the business venture through mentoring, coaching, financial monitoring, making connections etc.
Also note that angel investors improve their value to the companies they invest with when they participate beyond just the financing. Investors who interacted with their invested companies at least a couple of times a month by mentoring, coaching, providing leads or perhaps monitoring performance experienced greater results.
Even if they are not interested in directly participating they may know of someone else who would be interested and who could help the team.
Venture Giants Insider edge:
Consider if it is worth mentioning that you or your management team have 1-3 years of experience in this industry in your investment proposal that you submit on Venture Giants.
Extensive experience within your new start-up’s industry will be viewed extremely positively by any angel investor.