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.

(4) Coach

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.

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6 Comments

  1. Hi Elaina,
    Interestingly, I believe that the SME that I interviewed a couple of classes back (an entrepreneur and an investor) is serving the role as a team member investor with the company that he’s working for. He didn’t tell me that, but I’m putting things together now, and it makes sense from what he told me. I’ll have to get back in touch with him and investigate that a little more. Great write-up!

    1. Tripp,

      I love how this book made you reflect on previous conversations! That’s great. I’d be interested to know if real life investors are following the steps in this book and if they even connect their actions as specific things that most (some) investors have been trained to do. I’ll have to find some investors and ask!

      Thanks for your thoughts!

      Elaina

  2. Hi, Elaina!

    I enjoyed reading your post! You did an excellent job explaining the different types of investors as well as the types of entrepreneurs that would benefit from that particular type of investor, such as a silent investor. I like that you incorporated humor into your post as well. I agree that support, or lack thereof, can ruin a relationship, especially when someone is going through a very difficult time.

    1. Thanks, Elizabeth!

      My parents would probably shake their head at my humor, but they know it’s all love 🙂

  3. I think the investors who play a coach role are very important to entrepreneurs. Investors usually invest in areas the are familiar with so it is important that they make themselves available to help mentor the entrepreneur. I hadn’t really though about investors taking on team member roles that are direct projects for the company.

    1. I agree! Knowledge is power. Probably more powerful than money. This book really made me think about investing completely different. I, too, thought nothing about investors being team players/members. I think that’s really cool.

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