Preparation for Angel Funding

Seed stage: Once an entrepreneur has evolved an idea to a business it becomes time to seek an investment of seed funding.  An investor will be looking at the idea and the business plan from a feasibility perspective.  The goal of the seed funding is to bring the idea to life in some way.  This could be creating a limited feature version of the product or a demo version of the product.

Sometimes seed money is used for preliminary type operations ranging from market research to product development.   Seed capital is not necessarily a large amount of money. It typically ranges from $50,000 up to about $700K.

A short checklist that Angel Investors need to see include:

General Corporate Materials including Articles of incorporation, By Laws, a Minute book including resolutions of shareholders, directors executive committees and other governing groups

Operating Documents: Organization Charts, List of Shareholders, any copy of agreements relating to options, trusts, warrents, calls, convertible securities, etc.

Additionally you need a Certificate of Good Standing from the Secretary of State of the state where the company is incorporated

Financials: You will need financial statements such as cash flow and income statements, preferably audited by a third-party.  You will need schedules of loans and other indebtedness, any inventory, accounts payable, accounts receivable, depreciation and amortization tables.  You should also have an analysis of revenue projections, capital budgets and strategic plans that included fixed and variable expenses, gross margins and marketing projections.

Additional requirements (if appropriate):   Major Capital Equipment purchases, leases of equipment, real estate leases, deeds, mortgages, title policies, surveys, zoning approvals, variances, or use permits.  A detailed description of Intellectual Property including domestic and foreign patents and patent applications, trademark and trade names, copyrights and (copies of) and copies of all consulting agreements, agreements regarding inventions, licenses, or assignments of intellectual property to or from the company

Human Resources: a list of employees and employee benefits that includes positions, current salaries, salaries, and bonuses paid during last three years, and years of service (and description of) benefits of all employee health and welfare insurance policies or self-funded arrangements.  Resumes of key employees.   Summary plan descriptions of qualified and nonqualified retirement plans

Customer Information A list of the company’s largest customers in sales and any supply agreements.  This should also include a list of competitors and how your product or service compares; supply agreements, purchasing policies, all surveys and market research reports pertentant to your target market and product.

Professionals: A schedule of all law firms, accounting firms, consulting firms, and similar professionals engaged by the company in the past five years.   All published articles and public relation strategies. You will need a binder that includes copies of all advertising and marketing articles relating to the company within the past three years.  Also include press releases and analyst and pundit coverage.