Reading through the book “Winning Angels” has given me a lot of perspective on two aspects. What angel investors are looking for in someone to invest in, and how much work they go through to find the right deal and investment. These are the two points that we will dive deeper into in this post.
Lets begin with the type of entrepreneur that they are looking for. What struck me the most about this is that the key point a lot of them look for is someone who has a winning record. Someone who has proven themselves time and time again that they are able to win. There are other characteristics that they search for, however the winning record is a tale tell sign of a good investment. This made me realize that in order to appeal to the world of angel investors, I need to be a winner and have that record, but obviously you cannot start out with a winning record.
You have to start somewhere, and this is what got me thinking. I often have a hard time starting businesses because I am simply afraid of the starting point, or no one wanting to invest in us because I have no record. This is partly why I enrolled in this masters program, in order to gain some experience and legitimacy in the eyes of investors. However, part of the step I need to take is simply going ahead and trying a business, and if it fails it fails. Investors know that businesses fail, but you learn from that and build a better business next time. Learning from our mistakes or our victories are key for us to continue to grow as business men and women, so we should go ahead and take the first step, otherwise we will never gain that winning record angels are looking for.
Secondly, knowing that angels all vary on their time reviewing and deciding on who they wish to invest in is important. As someone who wants to invest, there is always the aspect of going with the gut because there is never 100% certainty of success. However, the amount of labor that needs to go in to the investment should be high. Looking at the possibility of the business fitting into and succeeding in the market is incredibly important. Every market is different, so if you delve into a new market you need to do your research on both the market and the business you may invest in to.
You also need to do your research on the entrepreneur you are investing with. They are truly the key to successful business. This means that you need to be able to read people and get to know them quickly because you cannot always take a year or so to build a great deep friendship. You have to capitalize on the idea when it is there, or let it go and move on. Being able to sense about people and pull out great thought on them quickly is something that appears to be incredibly important in my opinion.
These two points are not all the points included in this chapter, but they are the two main things I got from it. I know that I need to be able to bring myself, and well written plan before an angel investor so that they can get to know me and my business well if I ever need to seek out that form of capital.
- Amis, David, and Howard H. Stevenson. Winning Angels: the Seven Fundamentals of Early-Stage Investing. Financial Times Prentice Hall, 2001.