Investors hesitant to invest
11:39 pm edt
A 2005 national survey of angel investor
groups actively investing in private companies revealed that 66% of their members do not actively invest because of their
lack of knowledge of the process, not because the opportunity was considered too risky.
When I heard this statistic and called the firm conducting the survey to confirm, I couldnít believe that was the primary
reason aggressive sophisticated investors didnít invest in private companies.
So many exciting emerging growth companies struggle to find growth capital from angel investors. On average, only 23% of the companies that qualify to be considered by angel investor groups actually
receive investment. Although, there are many factors that drive this low
percentage such as valuation of the company, structure of the investment offering, and validity of the business model, this
study revealed that the biggest reason an investor doesnít invest is completely outside of the control of the entrepreneur. The potential investors simply are uncomfortable with the process of private
equity investment and their desire to participate does not supersede their fear of uncertainty.
I first became aware of the need for millionaires
to learn about the private equity investing process when a few wealth managers and investors came to me seeking information
on how to be an angel investor. I couldnít believe there wasnít information
readily available. Yes, there were many books at the library or book
store regarding private equity investing. Most are oriented toward the
entrepreneur or read like a text book. I realized that very wealthy people
donít want to spend hours and hours reading theory on angel investing when they could be playing golf or spending time with
their family. They want to learn how to take their experiences and apply
that to private equity investing. I began developing the Learn to Be an Angel
Investor series of e-books. They are now available at www.kyrmedia.com
Why do they think this works????
11:39 pm edt
It always amazes me when I receive an email from an entrepreneur who is seeking capital and their introductory email
completely sabotages their effort and intention. The two types of emails I receive that would surely cause
a the "DEL" key being hit by an investor go something like this:
1.... I'm sending this to you because it is my dream and I just hope you will please look at this and give me some
money. My mama is sick and if I could be successful at this business I could help her. Your helping me would be
such a blessing........
2.... This is the best thing ever....just click here and you will see.... www.somewebsite
. com If you have an interest email me back and I'll send you my business plan
No real investor will ever respond to those types of email with a...."wow, you are just the business opportunity I am
looking for, where do I send my check?????"
So entrepreneurs seeking capital....respect yourself and respect your business. Send a well thought out business
oriented letter that lays out the high points and when possible provide a link to the business information, not just a web
page, instead of an attachment. Email readers are 10 times more likely to click on a link than to open an attachment.