Form a Business Entity
It's true that unincorporated entities can still get funding, but if you start and manage a formal business entity like a C-Corp or an LLC, the potential investor will be more comfortable that you understand record keeping, proper accounting and other structural considerations.
Possess the Experience
If you don't have experience in the business of your venture, you are not a great candidate for investor funding. Even if you can find advisors and team members that have relevant experience, your investors want to know that their partner in this venture is not using their money to learn on the job. Bringing relevant experience to the table is a must.
Secure your Intellectual Property
Patents protect your unique inventions and processes and help you stand out from the crowd and make investors take notice. If you have a patentable product, angel investors will expect to see that you have either already secured, or are working on securing a patent.
Secure your Brand
Trademark registration is another way to demonstrate that you are serious about the business and are prepared to do what it takes to create a competitive advantage. Trademarks are the identifiers that are used to indicate the source of goods or services in the marketplace and help you carve a competitive advantage. Investors recognize the value of trademark registration.
Create an Investor Presentation and Business Plan
Your investors expect a business plan and a summary presentation to explain the most important aspects of your business including your products or services, your vision, the financial model, expected return on investment, and business valuation.
Create Key Contracts
Your revenue stream is only as good as your ability to protect it. Consider vendor and supplier agreements, sales contracts, distribution agreements, independent contractors agreements, non disclosure agreements, and others. Investors want to ensure that you have taken all the prudent steps to protect your business so that their investment wont be wasted chasing an unnecessary lawsuit.
Comply with Local, State and Federal Regulations
Nothing will shut down your chances of getting funding faster than an investor finding out that you are out of compliance with licensing and regulatory requirements. These issues always surface during due diligence and no investor wants to sign on to a legal headache. Get it right from the beginning and make sure everything is well documented and in order.
Proper Employment Practices
Ensure that your employees are an asset and not a liability. Employment contracts, pre-employment screening, proper state registration, workers compensation insurance, invention assignments, and a carefully developed set of workplace rules and policies are some of the things investors will look for to determine if an investment is worthwhile.
Determine the Investment Structure
Your business has to be structured to allow for investment and you should already know how you want to receive the investment and the basic deal terms before you meet with an angel. A private placement memo, formal shareholder's agreement, and deal term sheet are some of the tools that lay out the nature of their investment and the return.
Investors today are less wiling to part with their money to take a chance on an unproven business or a first time entrepreneur. Your ability to generate revenue will be your best asset as you attempt to convince investors that there is money to be made. Remember, investors are primarily concerned with only one thing - getting their money back. If you can show them that revenues are not a fantasy through your current efforts and track record, they will be much more likely to stop and take a look.