How to Kill the Angel Investor "Deal-Killers"
Have you experienced the frustration of dealing with a self-proclaimed "interested" angel investor who you just cannot close, no matter how hard you try or how many months go by? If you have, read on.
After writing last month about angel investment "Deal-Killers," I received a slew of emails and calls from frustrated and angry entrepreneurs unable to close deals with angel investors. Many of them had invested more than a few months talking to investors who had repeatedly expressed a commitment to invest. Yet every attempt at closing the deal had ended in frustration. Some of the angel investors finally expressed a reluctance to invest at this time while others have just dragged their heels and avoided the subject. Either way, the result is the same. The frustrated entrepreneur can't get the money he or she desperately needs for their company.
As pointed out in the previous post, the resistance often stems from the angel investor's uncertainty over how they will get their money back plus any profit that may have accrued. To be honest, their fears are warranted. Minority shareholders in a small private company (i.e., a chronically cash-strapped one) are at the mercy of the majority who can easily find a hundred better uses for limited capital than buying out investors--especially the passive variety. Both sides always have a convincing rationale. The minority investor feels that it's time he was finally rewarded for taking a gamble on the company at an early stage. Meanwhile the majority are convinced that if they just hold onto that money for another six or twelve months, it will allow the company to hit a new plateau which will insure its long-term success.
Who is right? Probably both sides to a degree.
With this problem in mind, I developed a tool for raising money that addresses the concerns that all angel investors have about investing. Indeed, it tackles them head on. In a nutshell, How Deal-makers Close Investors demolishes the big deal-killers:
-The inability of investor and founder to bridge the valuation gap.
-The investor uncertainty over the chances of a profitable liquidity event occuring.
-The investorss fears that majority shareholders will run roughshod over him.
Closing Angel Investors With Revenue Royalty Certificates (RRC)
Revenue-based financing is finally emerging from the shadows and I have been one of its pioneers. This product consists of a book in pdf and an accompanying spreadsheet in Excel. Contained within the package is all the knowledge you need to be able to utilize this innovative financing instrument to close the deal with angel investors. The instrument, called a Revenue Royalty Certificate (RRC) or Revenue Participation Certificate, is an off balance sheet loan which clearly demonstrates to the investor how and when they will recover both their principal and profit while also potentially receiving an equity stake in the company.
However, the RRC is not just about benefits for the investor. This instruments also offers substantial benefits to the entrepreneur. I am referring to freedom and autonomy here. With an RRC, the investor is unlikely to interfere with your management style as long as the payments are being made on time. The RRC is a win-win for both parties.
There are a few more bonus lessons contained within which reveal how sophisticated financiers select their target investors and do deals.
Get more information on how you can raise capital with a Revenue Royalty Certificate.