How to Pitch an Angel Investor

13.11.2018   |  Startup

Every month, I receive dozens of financing questions or requests that are more or less detailed. Almost all have something interesting in them. However, as my time and financial resources are limited, the ideas that I plan to use are only a few every year. I am not the only professional investor who has in mind a set of criteria according to which we validate an idea. Following is a list proposed by me. When making it, I have tried to be as objective as possible.

What?

  • Start off with the essence, define the idea in a sentence. Do you know what USP or Unique Selling Proposition is? It is a concept from advertising and refers to the sole benefit proposed by your product. Maybe, you know that I have invested in Vector Watch and together with the other investors I have enjoyed its success, when it was sold to the famous Fitbit. From the very beginning, Vector Watch is a smartwatch different from the rest, whose battery lasts for one month. This is the starting idea and it is clear, even though there are several other aspects to add afterwards.
  • What is your business plan? How do you monetize? This article does not aim at giving you tips on how to make a business plan. What you should note, however, is that an excellent idea, without the steps leading to it putting into practice is as good as null. Gutenberg invented the printing press by putting together already existing innovations. The printing press was taken over from the vineyard people, whereas the print with block molds had already existed in China for over 1000 years. And still, he revolutionized the world as he was intelligent enough to put all these together and turn them into a functional technology.
  • What is your market? Good start-ups mean creative, or even disruptive ideas, but they do not work by themselves. Vector Watch was an innovation on the smartwatch market and Gutenberg’s printing press replaced the medieval manuscripts, so they turned up in an existing background. Show your financer in what area of products or services you fit. They will all the more appreciate your innovation.
  • Growth opportunities/strategies/exit. If you don’t know yet that angel investors provide financing in order to get benefits at a later date, you should read business literature seriously. Your business may turn, logically, into a listed company and it may skyrocket by the subsequent contribution of an investment fund or it may be sold to a market giant. This evolution is also dictated by its nature and also by your personal preferences. Where do you see yourself in 10-year time? As CEO and minority shareholder of the company created by you, as Steve Jobs? Or maybe developing a quite different business? Relying on your exit money to invest in other people’s businesses, therefore acting as an angel yourself? You should answer all these questions and then send your answers also to possible investors.

How?

  • Clearly state to your investor what/how much you. Of course, the answer to the question “How much?” is the most important. Shyness has no place here, the well-grounded figures are strictly necessary, even if you won’t start with them, but with the idea. However, the financing pace/calendar is also important: if need be, a professional investor may rely not only on their money, but they will also know how to attract other resources.
  • Do your homework. It’s not necessary to suffocate with data the potential financers from the very beginning. However, if you have manage to arise interest by the initial presentation, you must be ready to answer any question. If you don’t have the answer in your mind, you can resort to notes, telephone, laptop. If you nevertheless happen to not know the answer, don’t try to mislead your interlocutor with phrases such as “We’ll see”. Not knowing a minor aspect is pardonable, but superficiality isn’t.
  • You will always need an attractive Powerpoint presentation, even if it is an informal pitch meant to arise interest. Assuming that you have managed to arise interest from the very beginning, the presentation is the second stage. However, be careful, as there are two types of presentations: those meant to be designed, which come as a completion of speech discourse and the self-standing ones, which are meant to be sent by e-mail. Ideally, you should prepare both versions.

Where?

  • Personal recommendations. These are certainly the most effective, although in Romania we tend to pay too much heed to them. Two things are worth mentioning here. Firstly, it is most serious if you disappoint the author of the recommendations. If you do that, no one will take it out on you directly, but your failure risks to be mentioned in the private talks between people who matter. If, on the other hand, you manage to make your potential partner enthusiastic about your project, it is a success: your personal recommendations might turn into endorsement. If you can turn a financer or a famous partner into an endorser, that is quite an achievement for you.
  • Industry events. The same as, in our country, personal recommendations are overrated, events are underrated. You have often heard that, at specialized conferences, it is the networking that matters, not the presentations. If you invest a few thousand euros in the participation in an event of the Mobile World Congress class, you will head home with a few dozen of business cards. If you manage these contacts well, some of them might become your business partners or financers. The thing is that events are very useful for a first contact, which you then need to cultivate by other means.
  • Online, in 1:1 conversations. By “1:1 conversations” I mean whatever can be conveyed via social networks or e-mail. LinkedIn is very appropriate for this purpose, as long as you know whom you are addressing and what you are asking. Don’t be shy, but avoid suffocating your potential partners with generalities, standard messages, so called spam. Of course, those who make their e-mail addresses public do that because they are open to proposals. If the e-mail is written well, it will receive an answer, especially from the potential foreign partners – even if it is a negative one.
  • Online, by public financing requests, such as Kickstarter or Patreon. It may seem that the crowdfunding platforms are meant for charity or cultural projects, financed with little by many, but this is not exactly so. A successful campaign on a platform of this kind is a good argument for a more significant investor. Even more, even as part of these campaigns, sometimes there is significant financing from individual investors, besides the “little” financing from “many”.

When?

The question does not refer to the time of day or the year when you make the proposal, but to the degree of maturity of your idea. Writing this article, I have started from the idea that you have incorporated a startup, in other words, you have the capacity of founder and entrepreneur. Well, in order to attract an investment, you must have already proven your reliability to a certain extent. This means a functional business, even if of a small scope and without profit. Professional investors are attracted by more than plans on paper. As long as they will entrust you with their money, they expect guarantees that you will know what to do with it and the safest guarantee is that you have already achieved something with your own forces.

Octavian Pătrașcu  |   13.11.2018   |  Startup

Three things to test and maintain in HR: hard skills, soft skills, and motivation

25.04.2019   |  News  |  Startup
The quality and efficiency of an employee mainly depend on their professional qualifications, but the modern human resources theory refers to this only through a partial term, namely "hard skills". In terms of evaluations and professional management, these “hard skills” are supplemented by a range of different qualities defined as "soft skills", such as the motivation that an individual demonstrates or chooses to develop.

Hard Skills: Easy to identify, necessary, but not enough

The term "hard skills" applies especially to fundamental professional knowledge, skills, and abilities, but not only. For example, if a programmer has to write code in Java, he will obviously have to know the programming language. In the field of hard skills, however, complementary skills such as foreign languages ​​or driving licenses also come into play. If the job description is not IT-related, the computer skills - quasi-generalized today - are also in the same complementary category. Upon hiring, hard skills can be easily tested or proven. Basically, all the skills in this category can be certified through a diploma or a certificate of qualification. These skills are the basis for the future work of the employee, but in the vast majority of cases, they are not enough to ensure good performance at the workplace.

Soft Skills: harder to test, especially required for higher positions

These are somewhat social qualities, relating especially to people-interacting abilities. Soft skills include teamwork skills, communication skills, leadership qualities, and the ability to solve problems as they come. From simple politeness to a nonconflictual attitude, a whole range of attributes can be added here, including good time management or the desire to conform to strict professional ethics. If hard skills are easy to identify, in the case of soft skills, the stereotype enumerations present in CVs are never enough proof of their existence. They can somehow be felt when hiring, during their interview or, possibly, through psychological tests set up by human resources specialists. As they mostly focus on human interaction, soft skills are increasingly needed as the position of the employee in the hierarchy is higher, but the situation differs from one job description to another. If the programmer we had as an example earlier does not necessarily need soft skills when writing code, a sales or marketing specialist will interact with the top management and thus cannot work without them.

Motivation: differs from case to case

Motivation is a problem that concerned psychologists way before Maslow's Human Pyramid of Needs. There are many hypotheses and models that relate to this theory. I will just state that a first classification refers to financial and extra-financial motivations. The former refers to material compensation and are accepted unanimously. However, since the beginning of the 20th century, it has become clear that there is no direct link between payment and the efficiency of a person. 100 years ago, however, besides the famous $5-a-day salary, Henry Ford offered land lots, kindergartens for their children and, in the case of immigrants, English courses to help them integrate into the mass production processes. Today, large companies provide health insurance, relaxation areas, various educational classes, physical activity facilities. All of these include career plans and contract terms that offer job security and much more. Perhaps, the first thing to remember is that motivation differs greatly from one employee to another. Effective management should be as flexible as possible, in accordance with the needs and incentives of employees, beyond the standard packages.

The Employer’s Perspective

From what we described above it seems that that the employer will consider the three components as we’ve structured them. Hard skills are easy to identify and absolutely necessary to ensure performance in a particular position, so these are the first ones that will be tested. Soft skills can be identified to a certain extent in the midst of the employment process, but initial perceptions can be confirmed or denied later on. What’s more important is sustaining them at the workplace, often as a necessity for promotion on a higher hierarchy level. As final words, motivation has qualitative rather than quantitative aspects. Employers should be less concerned about the answer to the question "how motivated is an employee?", but rather show concern towards the type of motivation that employees are most responsive to. Schematically speaking, if hard skills are mainly the employee's concern, soft skills relate to a process that takes place between the employee and the company, and in the case of motivation, it should meet the needs of the employee. Only by paying attention to all the three components, the employer and the employee can have a mutually satisfactory and productive relationship.
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