There is a type of professional relationship where the whole goal is to part ways and feel great about it. It shifts the paradigms of wining by competing to wining by collaborating; it bridges disparate powers or knowledge, capital, and connections; it dissolves the barriers of poor/rich, old/young, experienced/inexperienced, influential/unknown; it invigorates the economy, empowers individuals, nurture entrepreneurship; feeds on the promises of creating and sharing wealth; and much more. Yet the whole purpose of this relationship is to part ways and feel great about it.
Welcome to world of Angel Investing. As an angel, I will use my knowledge and contacts to:
- Attract the best opportunities
- Analyze the deals: market, team, technology, deal structure
- Evaluate if we complement each other: are we a good fit?
- Give you resources (time, funds, connections, suggestions)
- Help you reach the next level
- And detach from your organization under the right circumstances.
In this process I make several decisions, but fundamentally I need to know if I trust an entrepreneur. If I believe in the plan, in their capacity to execute, in their resilience to go through the hard times, and their humbleness to accept defeat or change, in their respect for my time and for my money, in their passion for their customers, in their support of good employees, and their capacity to let them go if they don’t fit, and in their interest that we will part ways in the not so far future, happy to have embarked in this journey together.
The last one is probably the most important part of my relationship with investees and the hardest to understand. There is a vast amount of information about the initial phases of angel investing, as there is a ton of information about starting a company, or maybe growing it. That is the easy part, the tip of the iceberg. The icing on the cake. What would happen AFTER the investment is made is the cake!
The real goal of any healthy angel –entrepreneur relationship is the exit. If there are some short, I haven’t found them. It all requires work, respect, and relevance. And the entrepreneur carries most of the weight. Entrepreneurs serious about raising funds and growing an amazing firm, make sure need to keep this in mind:
Work hard and smart
Best entrepreneurs are passionate about their work, they love it! They are fascinated with the opportunity, they are resilient, they are always thinking about their company or their project. As my friend and former professor Steve Spinelli told us once: “they are obsessed with the opportunity.” As I learned, they “love their clients.” They go through the phases of their company with a smirk “I’m doing it (phew! this is hard).” They put long hours and sweat through them. No doubt they earned their “sweat equity.” Best entrepreneurs know that angels are like enzymes, we accelerate reactions. With good-fit angels, entrepreneurs work smarter, have fewer or less embarrassing mistakes, receive reassurance, or get pushed for a change or pivot, clean their egos, and take breaks (break down also).
Respect our resources
Best entrepreneurs respect their angels, their opinion, their funds, their contacts. They appreciate the trust that angels put in them. They are not arrogant about their deals, they don’t consider that this is the only deal angels will invest in, they don’t believe that angels feel they are missing out if they don’t invest in their deals (ok, sometimes we do, but the demand for angel investing is higher than the supply). They keep us informed if we have invested, they ask for support in a timely basis. And, in some cases, they continue to reach out to convince us to invest in the next rounds if we have not invested in them.
Provide relevant information
Best entrepreneurs prioritize, and in particular, communicate with us on topics that are relevant to our relationship. Yes, nothing is wrong with collateral information, and general knowledge, but when we get a note from a great entrepreneur, we know it is going to be relevant to our relationship, we know what answer is expected from us, and we can take action rapidly without guessing. That creates a good flow of communication so we can also be proactive.
So, next time you are looking for an angel keep in mind that the goal is to part ways and feel great about it.
I don’t invest to play with you, I invest to succeed with you, part ways and feel great about the whole process!