A reflection on “Winning Angels: The 7 Fundamentals of early stage investing” by: David Amis and Howard Stevenson
This book identifies sourcing, evaluating, valuing, structuring, negotiating, supporting and harvesting as the 7 fundamentals of early investing for “angels”.
Winning Angels begins with describing “sourcing” in an investment deal. By page 43, I was thinking “this sounds like a different version of Shark Tank“.
About Shark Tank: Shark Tank, the critically acclaimed and multi-Emmy® Award-winning reality show that has reinvigorated entrepreneurship in America, returns this fall to ABC for its tenth season. The Sharks – tough, self-made, multi-millionaire and billionaire tycoons – continue their search to invest in the best businesses and products that America has to offer. The Sharks will once again give people from all walks of life the chance to chase the American dream and potentially secure business deals that could make them millionaires.
“Sourcing or identifying entrepreneurial projects of merit is the first step in the process of making early-stage investments.”
Sourcing for angels is a little different. One, angels do not have the platform of abc to source potential investments. However, for someone that is interested in the early stages of investment or an entrepreneur that is desires the financial backing of an investor, the chapter about sourcing is a great place to get started.
Amis and Stevenson divided the sourcing activities into four groups
- Preparation activities
- Networking activities
- Visibility activities
- Focus activities
Investing feels a lot like gambling and I am not sure that I am that risky. But, if I were to use the information provided in this chapter, this is what I would do:
- Preparation activity – Write my one page about the type of deals that I will be targeting. Fun fact about me is that I LOVE one pagers. I make my team members write them all the time about what they are working on or proposing.
- Networking activities – There are so may ways to go about this and depending on the audience, I would have an adjusted approach. The joining Chamber of Commerce is a great way to network with different companies, especially when it comes to sharing quality deals (as recommended in the reading).
- Visibility Activity – My preferred method of creating visibility would be to share the knowledge that I have gained through an online course. I would market this course through social media and to budding entrepreneurs. There could even be a contest post course – just by finishing the online course and completing some sort of targeted post assessment, each “student” of the course would enter an opportunity to win an investment.
- Focus activities – This activity would be about narrowing your focus to a specific industry. It reminds me of the practice of “Nailing the Niche” that I wrote about in another class.
[…] section of this book talking about the sourcing stage of investment. See my reflection on sourcing here. In the first page of the section about sourcing the authors make an immediate connection between […]
Hi Elaina! You mentioned online courses as a way to be more visible as an angel. I think that this can be said of entrepreneurs too. Prior to COVID I noticed a lot of people marketing their skills online as a course. I think COVID has made us all want to search for connection even if it means attending an online class with the “extra” time so of us have.
What I find most interesting about online platforms is that a lot of times it cost little to no money.(I am thinking of Zoom classes specifically), and it is a way to not only present a different facet of your business but a way to build your brand. I find that getting to know the person behind the brand really helps me connect with it more and thus, want to spend more money. Considering the low over head, the ability to brand, and creating different spheres of your business is a great idea for anyone who is struggling with building capital and even a potential way to bring some money in the door.
Thank you for your response. I have really focused a lot of time on online trainings since COVID. My company has face to face processes (membership based organization) that has completely affected how we operate. Literally overnight my staff an I had to acquire a new skill – creating online course (whew!). As a result it has made me think about creating business opportunities completely different. I was excited to see it mentioned in the sourcing section of Winning Angels because it is so relevant to my life right now.
I absolutely agree that online training/courses can be for both investors and entrepreneurs AND I agree that knowing the face behind the entrepreneur builds a relationship that you want to cultivate. That’s honestly why I have spent money on a $20 candle that I easily could have purchased from a “brand name retailer”. I found a company that I appreciate value wise.
Thanks for your perspective. I loved it!
You make some good points. I watch The shark Tank religiously and am intrigued by the drama and negotiation process. In the real world sourcing may work a little different than depicted on The Shark Tank. I do believe investors know what they are willing to invest in and make investments only where their interest align. Great post!
Every once in a while I watch Shark Tank. It can be a little much for me at times! Shark Tank is probably 10x different in real life because it’s reality tv (the irony) and also, most people do not have the negotiating power that the sharks have on that show. I bet there are other VCs out there that have the same approach though.
Thanks for your comment!
Excellent Post! I like you comparison of Shark Tank as a way to better explain sourcing. It goes to show that as entrepreneurs, we can chase our dreams and make them a reality by properly following certain steps.
It is very true that investing is like gambling, that is why investors have to usually make many investments so they have a better shot at getting the one that pays big. And the more you hone the sourcing skills the easier it will be to get those quality opportunities, and then the less risky it is (hopefully). I like that you try to increase your visibility. In my personal job, I am working towards getting more comfortable giving presentations to large groups.
I know what you mean! Large group presentations still make me nervous and I have spoken in front moderate to large groups for years. Normally after my first bad joke, that still makes people laugh, I get more comfortable.