A lot of angel investors are lying in wait and trying to work out when the best time to invest will be. Following the economic crisis there has been this trend where investors are constantly analysing the market and waiting for the economy to be in the perfect state for optimum investment.
‘Latent Investors’ is a name given to an organised angel investment group of wealthy investors who have yet to make a move. These investors are hedging their bets and trying to find just the right market opportunity. This is mainly due to them seeing a number of the entrepreneurs and companies that they invested in provide poor returns.
So the question is, is now the right time to invest? Also, is it a good environment for entrepreneurs to fully flourish in? Currently it looks like it could be, as the economy has shown a few signs of recovery these recent months. However, the fact is that if an entrepreneur has a solid business idea and the ability to drive a profit, there will always be an investor whether or not the economy is bad. The problem is that it just takes much longer to raise money in these poor economic times.
For entrepreneurs, the best advice is to keep focused and do not be discouraged if angel investors do not want to invest right away. They have a right to be cautious, but if you have a strong case and a good business plan then a savvy investor will not be far away.
So what makes a strong case? Firstly, demonstrating how the business plan will provide a good return on investment. You wouldn’t do something for nothing and neither will they. Investors in Australia will look to gain a good amount out of their investment, otherwise they will write it off straight away so be sure that you are factoring this into your pitch.
Since many angel investors have been in the same positions, trying to receive funding for their own business, it is worth remembering that they have been there already. So even if they cannot currently invest in this business plan, they might be able to offer some useful insight into your business plan and goals for the future, which may in turn lead you into creating a stronger case for investment.
Mike is an expert in angel investing and has helped many new entrepreneurs start up a business or help startups seek venture capital. Find out more on the Australian Investment Network.