More individuals than ever before are venturing into entrepreneurship. Many early-stage startups partner with angel investors to help create critical growth, as these funds provide business owners with monetary aid in exchange for equity and strategic business relations.

Want to know how to improve your chances of earning funds through an angel investor? Here are some tips on how to attract and build the foundations for a relationship with angel investors, while also creating a solid framework for your business.

Tell Your Personal Story

Angel investors want to support more than just products and services. They invest in the entrepreneurs themselves. They hope to hear the story behind the founders and what motivated them to create the brand. If you built an education app, for example, for underserved students, angel investors would like to know why you built the app and how you decided to do so. Founders shouldn’t be afraid to show passion and dedication for their project because those are key attributes angel investors want to see in their beneficiaries.

Solve a Critical Problem

It’s certainly not a perfect world, and there are many issues that entrepreneurs seek to fix through their products and services. Your product should solve an unmet need for people. Entrepreneurs should also be prepared to discuss their business solutions and how they can help stimulate growth. If there are other businesses similar to your own, describe your business pursues a unique approach to filling a void in the market.

Gain Valuation Data and Conduct Due Diligence

Getting your finances together is no easy task. However, company valuation determines your startup’s worth. Factors like ownership, profitability, market share, reliable forecasts and future predictions are important for angel investors to determine if your venture is a worthwhile investment. Entrepreneurs can always ask angel investors to help them determine the accuracy of their valuations.

Further, founders will want to conduct due diligence on their ventures. The process contains data that validates your business and ideally shows that your business is low-risk. Investors need this information to identify if the venture is worth funding. An Angel Capital Association report showed that investors who spent at least 20 hours on due diligence are five times more likely to solidify positive ROI. Remember to include financial reports, loan obligations, stockholder communications, supplier agreements, along with other information, in your due diligence folder.

Be Transparent 

Transparency is crucial during investment negotiations. Investors do not expect businesses to be perfect initially, but some founders might owe more debt than they want or may have struggled to meet specific market demands. Be upfront about your struggles with investors and engage in an open conversation about your plan to overcome those challenges.

Define your Exit Strategy

An exit strategy is crucial to achieving funding in your company. It demonstrates you have a clear, long-term plan for transitioning out of the business if needed. Investors want to establish how you’ll leave a business if the company is acquired by a larger company, sold to private investors, or otherwise. A well-developed exit strategy should be established, but remain flexible in your discussions with potential investors.

Good luck on your funding journey!