Equity capital, unlike debt capital, is when someone or some company invests in a company in return for shares or stock in that company. Angel investing is generally done as such an equity investment.

This money does NOT need to be paid back to the investor.

Rather, the investor generally gets paid when there is a liquidity event, which is the event through which the company “cashes out” such as being sold to another company or having an initial public offering or IPO. Note that a liquidity event is also known as an “exit.”

Note, however, that in some angel investments, angel investors can be paid dividend payments or profit sharing over time, and sometimes angel investments are structured as convertible promissory notes. Convertible promissory notes are loans with a fixed interest rate which, at maturity, can be redeemed for cash or shares of stock in a company. So, in essence, they are loans that can be converted into equity.

As you might imagine, equity capital is much riskier to investors than debt capital. As a result, angel investors expect to earn higher returns than they do with debt.

Specifically, angel investors generally expect to earn returns of approximately 30% from their private company portfolio. Note however, that you cannot simply offer an angel investor the chance to earn a 30% average return on investment (ROI). Why? Because most angel investments fail to reap any ROI. As such, if half of their investments fail, they would need to earn 60% returns on those that succeeded to realize a 30% average return.

Written by Dave Lavinsky, article source

Angel Investor Presentation

Five Tips for a Successful Angel Investor Presentation

When presenting to investors, the most important thing influencing your audience is visual (i.e., your body language), then vocal (your voice and speaking rhythm) and then verbal (the story you tell).

Also, when you present in front of a group, your natural “fight or flight” instincts kick in. Your adrenaline starts pumping and you often get anxious and fidgety. The way that you act as a result of this poorly impacts your audience’s perception of you.

To decrease your anxiety, use the following techniques:

1. Practice, practice and practice some more. The more you practice your presentation, the more comfortable you will be when you give it.

2. Concentrate. Just like an elite athlete, you need to clear your mind before the presentation so you can fully concentrate on the task at hand.

3. Shift Your Focus from You to Them. If you give a presentation and your best friend happens to be in the room, chances are that after the presentation the first question you will ask your friend is “How did I do?”

It is this mentality of thinking about yourself that makes people nervous. Rather, focus on the audience. Look at them and think “how are they doing?” This will allow you to present more effectively.

4. Focus on specific people in the audience. Whether there are three prospective investors or business partners in the room, or you are speaking to a room of 50 or 500, you need to visually focus on one person at a time. That is, pick one person to start and complete your first main point. Then you should shift to different people for each key point you make during the presentation. This helps you concentrate better and make sure you are focusing on the audience rather than on yourself.

5. Practice your hand gestures. Hand gestures often positively engage an audience. But, making hand gestures in front of an audience often feels awkward and uncomfortable. You must practice using them with “warmer” audiences (e.g., your friends, co-workers and/or employees) until they become second nature.

Like it or not, your public speaking ability and presentation skills are more important than the content of your presentations. As such, successful entrepreneurs need to master these skills. Use these tips to improve your skills, and remember to really practice all your presentations before the actual event. As you know, in most cases, you only get one shot at key presentations.

Written by Dave Lavinsky, article source