3 reasons why an angel investor might walk away from your proposal

The idea that you can start up your own business and bring your idea to the market for success appeals to a lot of people. Anybody has an equal opportunity to become a successful entrepreneur and get their idea to the market for success. 

However, the biggest challenge of bringing your idea to life is getting funding for it. Many entrepreneurs who aren’t fortunate enough to have a financial safety net during the initial stages of their business find it difficult to get investors to choose them. 

This is where an angel investor can help.  

An angel investor is someone who provides initial capital for a startup. If a startup has not yet established its product and business, it will need an angel investor to get them off the ground. Like any other investor, you have to prove that your business is worth investing in. If your pitch and product aren’t compelling enough, you may be turned down. 

Learn to avoid this by reading up on some of the major reasons why an angel investor will walk away from your proposal.  

1. Your Business Idea Doesn’t Have A Clear Market

One of the basic requirements of a successful proposal is to make sure you have identified a problem and a market for your product or service. You cannot jump into the entrepreneur game without knowing what you’re selling and who you’re selling to. 

You need to be able to clearly explain to your investor what the need or pain point is that you are solving and why this problem needs to be solved from the perspective of your customers.

Make sure you understand the market and its size. In addition to understanding your customer, you need to take the time to prove that you fully understand the market and its size. 

2. Make Sure There Are No Barriers To Entry 

Let’s say that you have defined a problem, demonstrated an understanding of the market, demonstrated how big the opportunity is, and then highlighted why it’s important to solve this problem now, but you have forgotten one very important thing: your competition. 

What if another company comes along in six months with a similar idea or approach but with enough cash on hand from other investors before it ever gets off the ground? 

If they already own most of the market share and have deep pockets, then how can you convince an angel investor that their money would be better spent investing in your startup instead of just giving more money to the larger company? 

If there’s anything unique about your idea outside of patent protection, something like how you plan to execute it or a first-mover advantage, then now is the time to mention it. 

3. You Don’t Have A Business Plan Or Financial Projections  

Angel investors expect you to have a clear vision of your business’s growth and how you will reach that point. Your business plan or projections are essential compilations of information that will show your long-term growth plans and help the investor decide whether or not to back your business. 

Without these, they will find it difficult to find a reason to back your ideas and are likely to walk away. 

Always Keep Working To Improve Your Pitch  

After you’ve met with an angel investor and received feedback, head back to your office or home workspace and think about what you could change about your pitch to make it better.  

Don’t get discouraged if an angel investor turns you down. In the world of business, you should always be prepared for rejection. 

Whatever the reason is, you should not take it personally. Taking key lessons from each proposal will bring you closer to finding the best investor to back you and your vision. 

When you’re ready, try pitching to another angel investor or even a group of them. The more practice you get, the better your chances will be of attracting the right investors for your business.

Jumping into the world of startups and entrepreneurship is not for the faint-hearted. However, as long as you arm yourself with the right vision, skills, the right team, and someone to back you and your idea, then you are taking the first steps to success.