Well firstly, it's important to remember an angel investor is different from your bank manager or a venture capitalist who invest other people's money. An angel is looking to put their own cash into your business. On the one hand, this is great as it means they can invest in whatever they want, and in general they don't have to see as large returns as a venture capitalist, so they can plough their money into smaller companies with a small target audience. However, it also means they're more careful and suspicious so you need to cater for their needs. Here's how you do that.
1. Sell yourselfYou have to persuade them that their money is safe with you. They need to know you're responsible and trustworthy. They don't want to give their funds to someone who has a history of losing money on failed businesses or blowing cash on pointless accessories. So it's good if you have a track record of being sensible with money. And if you do have a few tainted years on your CV, make sure you explain why they happened and how this time it'll be different. There's no point trying to hide or gloss over your past mistakes, as it'll just show that actually, you are pretty untrustworthy.
2. PitchA confident pitch filled with statistics and knowledge of your business is essential. Angels will scrutinise your idea, so it pays to have a well written and informative business plan. We've all seen what happens when someone doesn't know their figures on Dragons' Den, they end up red faced and embarrased, don't let that person become you. Typical questions that an angel will expect you to address are, how you'll spend their money, how you'll protect their investment in future rounds of funding and what your exit strategy is.
3. PrototypeIt's very unlikely an angel will give you money for something that's still just an idea. If you present them with a prototype of your product then they can actually see what they're getting for their money. If it's a website you should already have a domain name and a site up and running, and if it's a physical product you should have one made so the investor can test it out and decide if they like it.
4. Validate the business modelTry your hardest to get at least one customer. Having someone actually paying for your product already proves that people are willing to buy it. This will give an angel some more confidence in your business and will prove to them you're serious about making money.
5. Do your homework on the investorApproach an investor that's suited to your business. Someone who has the knowledge of the industry your business is based in and will be passionate about the whole idea. If you tell then exactly how you'd like them to help you and why you think they'll be good at it, you may answer the question they're asking themselves.