What happens after I pitch Corridor Angel Investors?

Eric EngelmannAngel Investing, Iowa Startup Accelerator0 Comments

If you’re selected to present to the Corridor Angels, there are three possible outcomes you should be ready for. After your presentation, usually within a few business days, our team will communicate to you where you stand.

Option 1: Lots of interest from investors

Usually the best case for you is that there’s significant interest from the group, typically four or more investors. In this case, our staff will work with the Corridor Angels who are interested to proceed to do the due diligence together in an organized fashion, aiming to develop a single term sheet that could be used for everyone. The primary advantages for you if this happens are:

  • you have one, or a very small number, of key contacts that are driving the process, but working on behalf of the larger group of investors that could invest in your business;
  • we can help you get other angel groups across the Midwest involved, to potentially expand the pool of persons who may be interested in investment;
  • you have a facilitated due diligence process.

The downside is that sometimes it takes a bit of time to coordinate communication across the larger investor group, but for a larger investment it’s generally worth it.

When you’re notified that there’s interest, you’ll:

  • be given a Dropbox link for document collection (or we can use one you already have, if you’ve already done this with other investors)
  • be given a more detailed questionnaire and a list of documents that start the due diligence process (see below for the standard list; feel free to start collecting these ahead of time, if you want to help speed things along)
  • setup a call with the due diligence team to get things rolling

Option 2: Minimal interest from investors

If there’s just a handful of investors (typically less than four) that expressed interest, it doesn’t make sense for us to run the process for you. Instead, we provide you with the contact information of the investors who wanted to go further, and it’s up to you to work with those investors to satisfy their questions in order to potentially make an investment.

The advantages of this for you are that:

  • you control the process and communication entirely;
  • sometimes the investment may be completed more quickly.

The downside is that you’re on your own to run the process. (We’ll help answer questions where we can, but we won’t drive the process for you).

See the Due Diligence checklist below for a list of some of the documents you might be asked to provide during the process.

Option 3: No interest from investors

Sometimes the pitch doesn’t resonate with our investors. That could be because you weren’t a good fit for our group, or maybe your business isn’t far enough along to be interesting.

Other options

For any of those scenarios, you have other options, too:

  • Apply again later: You can keep working on your business to try to reduce the risk profile or improve the return profile for investors, and apply to Corridor Angels again (generally, you’ll need to make considerable progress for this to work, so let us know if you think you’re ready to re-apply. We’re happy to give you some guidance as to the likelihood of being accepted.)
  • Bootstrap: You can get funding without giving up equity to investors
  • Other angels: You can pitch to other angel groups in the region (though if you wish to do this, you should mention it to us first, so we can help you decide which ones make the most sense, and if our relationships with those groups might make it easier)
  • AngelList: You can raise money via a syndicate on AngelList
  • Crowdfunding: You can try to crowdfund your business via Kickstarter or other platforms

The hard truth

You need to come to terms with this hard truth: investors have options. In isolation, you might think your business is obviously investable. But investors aren’t seeing your deal in isolation: they’re comparing it to other deals that they’ve done before, and deals they have on the table now, through Corridor Angels or other platforms. They might have an alternative option for their money too, like a vacation home.

Your role in presenting to Corridor Angels, or any investors for that matter, is to make the case that your business opportunity is the single best opportunity they can put their money into right now. Bear in mind that the Corridor Angels group is designed to surface investable deals specifically so that angels can compare them to find the best ones. And certainly our investors aren’t just looking at the deals we generate: you might be competing with deals from around the world on Angel List or other platforms.

To be fair, though, you have options too! You should shop for the best investors that can fund your deal, whether they’re local or not. But your time is probably more precious for your company’s survival than an investor’s time is.

In other words, raising money isn’t easy. We will advise you along the way; don’t hesitate to reach out if we can help, regardless of the outcome from your investment pitch to Corridor Angels.

Due Diligence Default Document Checklist

Not all companies will have all of these, but the more you can provide, the more comfortable the investors will feel that they’ve covered all their bases. Note that investors will also ask many additional questions and may well ask you to produce additional documentation.

  • Income statements and balance sheets for last three fiscal years (accrual basis)
  • 3 Year Financial Pro-Formas–Income Statement, Balance Sheet, Cash Flow Statements (accrual basis)
  • YTD income statement and current balance sheet (accrual basis)
  • List of current shareholders and number of shares owned
  • Stock option or warrant agreements
  • Copies of all loan agreements in excess of $20,000 (include copies of UCC filings.)
  • Copies of all leases or contracts in excess of $15,000
  • Articles of Incorporation and By-Laws and other organizational documents
  • Marketing or Royalty Agreements
  • Employment or Consulting Agreements
  • Non-Compete or Non-Disclosure Agreements
  • Assignment of Inventions/IP Agreements
  • Organizational Chart
  • Resumes of Principals with references
  • Proof of insurance coverage
  • Copies of patent, trademark, and copyright registrations
  • List of references (creditors, suppliers, customers)
  • Business Plan
  • Marketing brochures, press releases, white papers, published articles and copies of significant information written about the issuer.

 


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