What role is best to be as an angel investor? What role does the entrepreneur need? Looking at the various roles that an investor can play it all depends on their past experience. People involved in a new start up and need seed money are not always the most business intelligent people. They have holes in their game plans because they have never done something like this before. That is where an angel investor can come in.
There were several types of investors, but as I read through the book “Winning Angels”, I noticed something interesting. The angel investor probably knows exactly what the entrepreneur needs, but I do not think most entrepreneurs know what they are lacking. This has the possibility of causing a difficulty of a successful business if the business is not invested in by the correct angel. The reason I say this is that some investors have no interest in working a lot and taking over the company to get it really rolling. Then there are some who want to be extremely involved, maybe even too much sometimes.
In the book it mentions a scientist who had not clue what he was doing in the business sense but had a good product. The angel then took over the company as CEO so that the scientist could focus on the product, and then the angel found a full time CEO to take care of everything. Imagine if the scientist did not find this angel to invest and just took capital from a venture capitalist. More than likely his company would be a very small company and very inefficient. I would not say that it shut down because if his product was good then he can probably make it work, it would have just not been as successful.
With all of these things in mind, it brings me to a greater conclusion as to the perspective angel investors and entrepreneurs need to have. Angel investors need to be willing to do whatever the entrepreneur needs of them, even if that means they do not need to invest because they cannot offer the time. In this way, they are still serving the entrepreneur and hopefully pointing out to them the kind of investor they need to be looking for. Entrepreneurs, on the other hand, need to be humbling and fully evaluating themselves in order to know what kind of investor is necessary for their company to have its greatest success. They also need to understand that some people may not invest with them because they do not want to do what it takes to really bring great success.
By knowing what each other need and are looking for, I believe that this can create a great over arching Supporting each other and all businesses is what allows our economy to thrive and build innovative businesses that are shaping our country and world. So humble yourself and serve other people in their businesses, even if that means turning down the work so they can find someone who can truly help them achieve greatness!
I want to add that there is much more to gain from this chapter and this book, so read into much more. This topic is just one that really caught my attention throughout it and got me thinking.
- Amis, David, and Howard H. Stevenson. Winning Angels: the Seven Fundamentals of Early-Stage Investing. Financial Times Prentice Hall, 2001.