Raising an Angel Round in the South

Today, two different entrepreneurs asked me for advice about raising an angel round, and both are located in the South, making for its own unique dynamic. Even with the negative press about the Facebook IPO, which was very successful for Facebook, the startup world is buzzing with enthusiasm and opportunity. From a trends perspective, social, mobile, and local show no signs of slowing down.

So, for entrepreneurs raising an angel round anywhere, but especially in the South, here are a few recommendations:

  • Build a simple executive summary that is shared as a PDF and no more than two pages.
    Executive summary sections:
    – Team
    – Description
    – Product
    – Market
    – Customer Benefits
    – Competition
    – Company Stage
  • Make some very basic financial projections
  • Build a working prototype (minimum viable product) and sign a couple paying customers
  • Consider the amount of money necessary to achieve a major milestone in the next 12 – 18 months (e.g. it might take $500k to hit $100k in annual recurring revenue in 12 months, so $500k plus some margin of error would be the amount to raise)
  • Think through the pre-money valuation, which is typically $1 million plus or minus 50% for most startups, with exceptional startups getting $3M – $4M pre-money valuations
  • Network through local technology groups, co-working spaces, lawyers, and accountants for intros to angel investors
  • Apply online to local angel networks (e.g. Atlanta Technology Angels)
  • Remember that the best time to raise money is when you don’t need it

Raising money is hard. Raising money in the South is even harder. One of the best things you can do is to start developing relationships with people in the startup and technology community well in advance of raising money. There’s no sure way to raise money but the path outlined above works well.

What else? What are some other recommendations for raising an angel round in the South?

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