Documentation Required for Angel Investors
Angel investors, who are typically wealthy individuals that are willing to help out small businesses and startups, require hordes of documentation. This documentation serves as evidence of the claims made by the management team about the business. Presented plans are also expected to outline reasonable paths to highly achievable outcomes. Many investors prefer to see plenty of supporting facts and data backing up the company’s methodology. Additionally, all of the paperwork will be heavily scrutinized for accuracy.
Other People Are Reading
-
Claim Support
-
Project documentation can give credibility to the management team. In many cases, the company’s spokesperson will engage investors in serious conversation prior to submitting documentation. These conversations are generally done through conference calls or in-person meetings set up by business brokers and consultants. It is after these talks that information is given about the business, its competitive advantage and projected profitability. Prospective investors may end any funding relationships if they find the documentation to contradict the founder's claims.
Business Plan
-
The business plan is at the heart of all documentation packages. Business plans declare the company’s objectives and how it plans to achieve them. Comprehensive plans will include components, such as management team biographies, income projections, the amount of investment sought and market assessments. Well-crafted plans can sway investors to rain funding into the company coffers. Or, they can convince angels to decline the proposal immediately.
-
Evidence of Success
-
Documentation proving the company’s existing progress is vital. Angels prefer to see facts as opposed to unverified statements because it lessens the founder’s ability to embellish. Strong supporting documentation will include client testimonials, third-party engineering reports, purchase orders and government endorsement letters. The purpose of the evidence is to show that its past the theory stage and ready to move to a commercial level. Furthermore, analysts or fact-checkers are generally employed to corroborate all company claims.
Legal Paperwork
-
Investors also require legal documentation. Common legal agreements such as nondisclosure agreements, patent filings and purchase contracts are often used in conjunction with investor-company conversations. Legal documents will vary tremendously with each project and corporate attorneys are typically brought in for advice. Projects involving international clients or products may also need government permits. Companies selling equity may also need to provide a private placement memorandum, a document that explains the details of the investment to potential investors.
-
