Assume you’ll be pitching to sophisticated investors

You have an idea for a business, but you need funding. How do you get started? The angel investors that provide capital in exchange for equity ownership of a startup company come in various shapes and sizes. There are sophisticated angels, unsophisticated angels, guardian angels, super angels and angel groups or angel funds. With so many types of angels, how can a founder ever determine how to prepare for such a motley group of prospects?
The answer is to always assume that at some point, you will end up pitching your opportunity to sophisticated investors, and therefore, prepare for it.
Demonstrate expertise
Sophisticated investors expect to see a well-defined business plan and spreadsheets with projections of revenue, expenses and net income, with a cash flow analysis. They expect you to demonstrate your market research, industry prowess and ability to understand the buyer of your product or service.
If there are any particular manufacturing processes or operations specific to your business, you will need to demonstrate your knowledge of them. They want you to know the competitive landscape, discuss barriers to product entry and to be knowledgeable about the sales and marketing aspects of your business.
An ability to execute
Angel investors invest in the business, not the idea — therefore they will analyze you and your team’s ability to execute. They want to know your advisers and whether you are using them wisely.
In real estate investment, there is an axiom for success: location, location, location. In startup investing, the axiom for success is “management, management, management.” You can have a great idea or a great plan, but if you can’t execute it, it goes nowhere. Your team is most important.
That’s why many angel investors become guardian angels that are actively involved with the team, providing valuable advice and key introductions to suppliers, bankers, sales people, etc.
Investors will try to assess how well you surround yourself with good people for all the resources necessary to ensure your success.
Prepare to pitch
When you make an appointment with an angel investor, send him or her your executive summary of the business. Be upfront with your intention, and explain why you are requesting the meeting.
Have your business plan handy when he or she asks for it, as well as all your financials. Prepare a pitch deck of discussion points. The pitch deck should follow the 10, 20, 30 rule — 10 slides, 20 minutes and 30-point font.
Don’t expect sophisticated investors to sign a nondisclosure agreement. They see hundreds of deals annually and will not get involved in a trivial lawsuit over something they viewed that might be similar in nature to yours.

Finally, do your homework and research whom you want to approach. Network like crazy. Attend startup demos and venture fairs, visit incubators and accelerators, and attend clubs designed to assist startups, such as TiE, MIT Enterprise Forum, the Pittsburgh Venture Capital Association or the Pittsburgh Technology Council. Many universities have programs to assist startups, and don’t forget to contact the local office of the Small Business Administration.