A reflection on “Winning Angels: The 7 Fundamentals of early stage investing” by: David Amis and Howard Stevenson
Support may be one of the strongest words in the English language. It is the one thing that will ruin a relationship (personal or professional). There is no doubt it is important in business and especially for the relationship of a winning angel and entrepreneur.
The five different types of supportive/participating roles for an angel may differ at varying points of the investment relationship. These are the different roles an investment angel may play.
(1) Silent Investor
For an entrepreneur that is self sufficient and has a clear vision for their company, they may appreciate the role of the silent investor. I wish my parents would have been silent investors growing up (ha!). Just kidding. Now I have an even fonder appreciation of the team member and sometimes coaching role that they played.
(2) Reserve Force
This investor will provide guidance, as requested by the entrepreneur. This role is extremely helpful when the entrepreneur approaches a component of their business that is outside of their comfort zone or wheelhouse. For me, this would be investments. I have not kept it a secret that investments would be a challenge for me. I would certainly request assistance from an angel regarding investments.
(3) Team Member (Full or Part time)
This supportive role would be right up my alley as an angel, if welcomed and if necessary. I have been told that I have a talent of talking a small idea and making it a great success, beyond the original vision. As a team member, I could see being instrumental in providing hands one support in the launch of new products and/or ideas.
Having been in a director position for the last 5 years, and also reporting directly to the board of directors, I have had to coach and I have had excellent coaches. The one thing that has been the most important factor in coaching is consistency. While I enjoy getting my hands dirty and producing the results, there is also something very satisfying about empowering others to lead with your guidance and support. That is how you build multiple empires with multiple streams of revenue.
(5) Controlling Investor
This role is borderline on becoming the entrepreneur. Amis and Stevenson indicate that this role kicks in mainly when the investor has high stakes – major capital investor, voting control, controls the board, or controls through the investment agreement. Most people do not appreciate a control freak. However, if it’s necessary to save the business, you have to do what you have to do.
The biggest take away that from the section of the reading were two simple questions (page 267):
- What does the entrepreneur need? You will know this from probing conversations, observation and experience from other deals.
- What does the entrepreneur want? This question is equally as important. Allowing them to tell you what they want eliminates the guessing game. It also shows you their level of confidence. The same confidence they will need to lead a business to success.