Pitching to an angel investor involves more than just having that innovative, life-changing business idea. To stand out, entrepreneurs must focus on a compelling vision, a cohesive team, and a unique market proposition.
Are you thinking about pitching to an angel investor? It’s not just about having a brilliant idea – much more goes into catching their eye. In New Zealand, organisations like Enterprise Angels and Angel HQ are constantly searching for start-ups with high-impact potential. But what exactly do you need to stand out? NZBusiness spoke with two of the country’s top investors who share their top tips on on tapping into venture funding.
Wellington-based Angel HQ Director Susan Iorns is a seasoned expert in angel investing. Angel HQ has invested in well-known businesses such as Sharesies, Hnry, Flick Electric, Times7, Eight360, Mevo, and more.
Susan was also recently awarded with the Angel Association New Zealand’s 2024 Arch Angel accolade at the 16th New Zealand Angel Summit in Auckland, which recognises her as a standout angel investor.
The Arch Angel Award is the highest accolade in New Zealand’s angel investment community, given to those who invest their time, capital, insights, and networks into high-growth start-up companies. Susan has significantly impacted the New Zealand start-up ecosystem by mentoring founders and advocating for the industry.
“A founder with a really good idea and a big vision is always attractive to invest in,” says Susan.
Sharing Susan’s insight, Tauranga-based Enterprise Angels CEO Nina Le Lievre says that her company is always in search of that “painkiller rather than a vitamin”. “Something people need rather than just something ‘quite nice and dinky.’ We want people to try it and say: ‘I can’t go without it, I need it,’” Nina says.
Enterprise Angels has made a significant impact by investing over $70 million into 112 businesses, with a considerable portion of those investments made in the past five years. Nina says that having a unique proposition with global growth potential is crucial for attracting angel investment.
Enterprise Angels primarily targets software companies and deep tech start-ups, such as Fuel 50 and Real AML – Kiwi businesses that have made waves internationally.
They also helped connect an agri-tech start-up Bovonic with the right investors, allowing the businesses to grow exponentially.
Liam Kampshof, founder of Bovonic, says that for the first six months in businesses he naively thought that he could develop a hardware product with $20,000. “The best part about having an angel investor, especially one connected through a group like Enterprise Angels, is the depth and breadth of the network they provide,” he explains.
For Bovonic, these connections, particularly in the dairy industry, were invaluable.
“Getting a capital injection is exciting, but it needs to happen within the context of a solid relationship,” he says. Transparency and open communication are essential to align with investors’ expectations and make them feel like integral partners in the journey.
“Investors become a part of your business, so you owe it to them to be open and honest.”
Invest in people
While industries like AI and climate change solutions are attracting attention and significant investment, Susan stresses the importance of staying authentic to your core business idea.
“These are trendy sectors, but it doesn’t mean you need to pretend it’s your thing. You’ll be competing for funding with companies that are hotter at the moment, but don’t dilute your idea or falsely position it as something else.”
Vision, while crucial, isn’t the sole driver of a successful business venture either, says Susan. The strength of your team plays a critical role in long-term growth and sustainability. “A cohesive team is crucial. You want the founder to be able to hold the team together, and the team should complement each other’s skills. We investors look for this type of thing when deciding whether a venture is viable.”
Adaptability, fearlessness, resilience, and international exposure are essential characteristics that make a team stand out in Susan’s mind. These attributes, combined with deep domain expertise, give start-ups a better shot at navigating the ever-changing business landscape.
Growing your business
Not only are start-ups looking for investors, but some established businesses also find value in angel investors. Susan says there could be many reasons why established businesses are looking for investors, including undergoing a rebrand, launching a new product or seeking funds to help grow into new markets. “These businesses have the advantage of a track record and previous organic growth.”
“We will look at what their needs are and what their plans are. We want to know what we will get for our money, how you are planning on being successful, and how we will eventually get our money back.
Angel investors do far more than simply provide capital; they share their knowledge and expertise, helping founders scale their businesses and make invaluable connections within their industries.
Nina says that attending a drop-in clinic is a good way to start engaging with angel investors. “These clinics allow founders to present their ideas, gain feedback on scaling, and make important connections that can propel their business forward.”
Angels offer free insights in 20-minute monthly sessions or on request in cities like Whangarei, Auckland, Tauranga, Wellington, Blenheim, and Wanaka.
Once you’ve had a session at the drop-in clinic, you need to put together a pitch, which you will present to angel investors. Nina says to keep the pitch clean and simple answering these five core questions:
- What problem are you solving and how?
- What is your big vision?
- What social impact are you making?
- Who is on your team, and what is their background?
- What is your market size?
Enterprise Angels boasts around 200 investors with broad expertise across different industries.
Nina underscores the importance of collective effort when scaling businesses. “It takes a country to grow a business, and it’s hard work. If we can all work together to support New Zealand companies, it helps the country grow, boosts exports, and benefits jobs and economic development,” she says.
Angel investors focus heavily on achieving product-market fit, where a business’s marketing dollars can begin driving revenue growth. Before that, seed-stage funding often helps finance the company’s first steps, including building the founding team and developing the initial product.
Despite New Zealand’s wealth of innovation, Nina points out that start-ups still receive less investment than other countries.
“The government needs to continuously focus on improving this,” she adds.
Start-up investing is inherently risky – roughly one in 10 investments may return 80 percent of the profit, while about half of the start-ups could fail. However, Nina remains optimistic about the future. “In the current environment, with higher interest rates, the risk is greater, and we’ve seen a decline in the investment space. But as interest rates drop, we expect investments to increase again.”
So why do people continue to invest in such risky ventures?
Nina believes that angel investors are motivated by the excitement of being at the forefront of innovation. “For me, it’s exciting because you’re part of something bigger. Some of these businesses change lives or disrupt entire industries. It’s transformative.”
Founder of Chanui and Rochdale Advisory Group, Doug Hastie, is a serial entrepreneur who raised $10m with the help of existing and new shareholders for his company Syft.
He says that investors are drawn to fresh, innovative ideas but also want to know that your business has the potential for longevity.
“New and different always gets lots of interest. In the long-term, though, it’s about making a business that is successful for the long haul,” Doug explains.
Founders need to focus on their unique value proposition and back it up with proof – whether in revenue, customer growth, or strong partnerships. Show investors how their capital will help drive your business forward and inspire confidence that you can execute, not just dream.
He says the decision to bring on an investor should go beyond just securing funds. “They need to be good people and aligned with your business’s plans.”
The wrong fit could derail your venture, so building trust and having open conversations about your business’s direction and future goals is key. Investors should bring more than just capital to the table – they should be long-term partners who share your vision.
Boldness is another critical aspect of pitching to investors, but Doug reminds founders that being able to deliver is just as important.
Finally, a well-crafted business plan is essential when pitching to investors who want to see how you plan to grow and scale your business, and they need to believe in your strategy. Doug underscores the importance of turning ideas into action. “You need a strategy and a goal, but then it’s all about doing,” he says.
Founders should ensure their business plan is clear and concise, outlining the market opportunity, growth strategy, and financial forecasts. Investors want to see a clear path to profitability, so demonstrating that you’re already taking action and building momentum is crucial.
In addition to having a business plan ready, Nina says there are five more things you should prepare when approaching investors.
- Unique proposition: What sets your business apart is your secret sauce.
- Market validation: Proof of demand for your service or product via research and sales.
- Pitch deck: Clear, concise presentation covering the business, market, and team.
- Financial projections: Realistic projections that justify the investment and show growth potential.
- Drop sheet: A one- or two-page overview of key points of your pitch – value, model, and projections.
As you prepare your business for angel investment, remember that it’s about more than just a great idea – it’s about being ready to transform that idea into a successful, scalable business. Whether you’re refining your pitch, building a cohesive team, or finding the right investors who share your vision, both Susan and Nina agree that securing investment requires preparation, resilience, and a strong commitment to execution.
This article was originally published in the September 2024 issue of NZBusiness magazine. To read the issue, click here.
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