What Are the Normal Steps for Angel Investment?

Question: What are the normal steps for angel investment? What’s involved in submitting a business plan?

I decided to answer this question here because I see it so often in email and in question and answer sites on the web, especially Quora, which is where I first saw it and answered it.

Yes you do need a business plan

In the U.S. market the business plan generally stays in the background while investors look at summaries first, then pitches, and only eventually, after a lot of screening, if they are interested enough to do the detailed study called due diligence, then the business plan.

You want a bare-bones lean business plan to guide your summary and pitch deck. You need to know strategy, tactics, milestones, and essential projections. But investors screen startups based on summaries and pitches before they look at full business plans.

But that’s not what you show investors first

So here are the normal steps:

  1. Summary. That’s either summary memo, or profile on Startup Funding & Investing and AngelList, or similar.
  2. If and only if the summary is interesting, then the pitch. There is a lot more information on the business pitch here on bplans. And for more of my posts, on this blog, choose the business pitch category.
  3. If and only if the pitch is interesting, investors will want to see a full business plan for due diligence.

However, this applies as general norm only, and in the U.S. market only. Generalizations are never always true. There are always exceptions.

(note: this first appeared as my Quora answer to What are the steps involved in submitting a business plan?


  • David Fahrland says:

    SBA.gov is recommending a 40-50 page detailed Business Plan that sounds like a lot of work, but the planning tools are excellent. Why should i or should i not follow their plan versus doing a lean business plan? P.S. I intend to approach 5 Angel investors and 1 MIT Alumni Venture capital firm for $100- 200k for the first year and one half of my Computer Music business. Thanx

    • Tim Berry says:

      David, I like the SBA content a lot; I’m even a regular blogger there, (click here). But some of that content is very old now. Remember, form follows function. Do the bigger plan if it’s really necessary, useful to you. Is it really required, the big plan instead of just a lean plan? I don’t think so. I wrote why not in this post: The angel group I’m in doesn’t think so. We were always fine with a good pitch, good summary and profile information, and a lean business plan for milestones, metrics, and projections. But do what your investors (and potential investors) tell you they want. Tim

  • Bigcitydreamz says:

    Most investor are using an outdated system to find investment opportunities. The banks and other lending facilities are losing they don’t look for trends. Now that crowdfunding gain the trust of the public it became harder to even get approve on their platform.

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