Approaching investors for that crucial first round of funding can confound even the most intrepid entrepreneur. How can you sell them on your idea? How do you close the deal? A big part of getting the right answers to those questions lies in knowing what the angels on the other side of the table are thinking and the potential promise -- and pitfalls -- of the deal to come.
The looming question that plagues early-stage investors is how to value a business that's not yet a business. Putting up the initial funding for a venture is always a risky proposition. The normal indicators of value -- revenues, customers, cash flow, and (some day?) net profits -- lie far in the future. So angels look to other indicia when a promising startup is raising seed money. The more areas in which you can assuage an angel's fears, the closer you will be to getting the funding you need.
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