To get anybody onboard your ship, you need first to assure them it won't sink. In order to do that, you first demonstrate that the ship is well built and structurally sound. Second, you convince them that you have checked all the forecasts, and the forces of nature appear to be on your side. Finally, you seal the deal by showing them the wonderful courses you have charted and all the exotic ports you will stop at. Although presenting a case for remote work startup investing goes beyond this metaphor, it should help you get started on strategies for approaching the pitch deck.
Startups that are remote-first might find themselves in a unique disposition right now. The pandemic has made a solid case for remote setups and why it could be the future. But startups need to reiterate why they choose to go remote and how it will affect them in the long term. Angel investors are in it for the long run. Angels make up about 25% of a company’s portfolio, a significant portion. Every investor has their own formula, but there are common elements to them. This article discusses some of these aspects and how remote startups can approach and get investments from angel investors.
How to get investments from Angel Investors
There's a saying that, "Investors bet on jockeys, not horses". Startups can be unforgiving, and founders need to have the drive to grind through the tough times. The pandemic has been a testing ground for many founders and entrepreneurs who have navigated their companies through the pandemic will continue to stand out. Resiliency, capacity to manage adversity, and adaptability are survival skills that investors look for.
The founder also needs to have the support of a core team with the right skills, drive, and temperament to pull through. Investors will want to know if the remote work startup team has worked together before, what relevant experiences they have between them, and what key additions are needed.
When addressing the remote questions, come up with compelling reasons for why you chose it. Speak about the invaluable talent, skills you have access to as a remote work startup, the functions that are carried out by remote teams, and how indispensable they are to you. Talk about the contributions they have made to your startup. Even though numerous studies back you up on the benefits of remote work startups, focus on your story. Concentrate on the team that has helped you gain traction and how they enrich the company culture. Also, highlight the commitment of the workforce, that key functions of full time employees.
Angel investors are looking to get in early into businesses that are scalable and have a promising future. Present your business as it is now, where you hope to be in the next five years and the five years after that. Even if your initial product or service offering is small, portray your company as a platform or parent business, reserving space for the creation of other products and services. Investors love numbers and if you can give your prospects tentative figures on what portion of the market you plan to capture, that'll be the icing on the cake.
We have already witnessed disruptive COVID-induced changes to work in every industry.. The question is: What changes are permanent and which will revert to the pre-pandemic normal? More importantly, at what place in this tumultuous landscape is your startup positioned?
Before going in to pitch your idea, you need to have a grasp of the financial metrics of your business. You should be able to articulate your metrics and understand what they mean for your business. Having industry averages in mind so you can see how well you fare against your contemporaries is also a great idea. Have a clear understanding of how much capital you need and how you will spend it. Compute the monthly burn rate of the business, projection for revenue growth, gross margin and EBITDA. Angel investors will also want to know an expected gestation period, after which you can get to profitability, so have that prepared. If you can predict future capital requirements, have that plugged in, along with other industry specific KPIs.
There will inevitably be several risks to your venture journey. Polishing and downplaying them will only be catastrophic later. Angel investors for startups anticipate two types of risks – diversifiable risk and non-diversifiable risk. Non-diversifiable risks relate to the economy at large and affect all businesses. On the other hand, diversifiable risks are risks that are unique to the company. Even if investors can safeguard their assets by diversifying their portfolios, it is better to present good risk management abilities. You earn investors’ trust when you are forthright about contingencies and your plan of action to deal with each of them.
Being a remote setup can pose several legal, regulatory and technology risks. Employing teams from across the globe places compliance and payroll risks. Outline the steps taken to counter each of these steps. For instance, to cut down on labour regulation violations, you can use an Employer of Record (EOR) platform for your compliance.
Ensure you have assessed product liability risks, have the required trademarks, and have secured your IP rights. Protecting data should be a priority and entering into data protection agreements with third party vendors is key. Risk mitigation is an ongoing process, so if you can ensure a robust system in place for the same, it will boost investors' confidence.
Although the average age of the investor is still in the late forties, we're seeing an increasing number of millennial and Gen Z angel investors now, due to the relaxation in networth requirements in different countries. A common theme among younger investors is that they see it not merely as a tool of wealth creation but also as a means of advocacy. By selectively picking startups that share their values or have the same vision as them, they are building more of the world they wish to live in. It is key now more than ever, to define the ethos of your venture and what you seek to add to the world.
The Future is All Remote
The more you hear from fellow founders, CEOs and entrepreneurs, the better prepared you will be in your quest for angels. To get insights and draw inspiration from thought leaders, join us at Skuad's virtual event –
All Remote: Building a new world work culture on 18th, 19th and 20th August, 2021.
Register today on www.allremote.club to book your front-row seat at the All Remote Virtual Summit.