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In my writings about governance and oversight, I have focused on demonstrating how important a professionally organized board of directors can be in determining the future prospects of a company.
When I write about my advisory work with CEOs, I argue that the kind of direct and firm guidance that an experienced serial entrepreneur can bring to the table provides a template for the aspiring entrepreneur. It also supplies the demand for accountability, veracity and a commitment to results that goes well beyond the verbal.
Failure is a much sadder tail if it is the result of indifference, missed opportunities and regrets for what might have been. Investors advance their own interests by making sure that there is a firmness – even forcefulness – in the mentoring of the CEOs and management teams they have invested in.
© Dr. Earl R. Smith II
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Related Articles:
- Angel’s Sins
- Angel Investing – Governance
- Gap Analysis
- Executive Coaches as Mentors and Advisors
- Reflections of a Coach
- Team Coaching – Building Value by Unlocking Potential
- My Executive Coaching Perspective
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3 Responses to “Angel Investing – Hard Choices or Hard Times”
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Mr Smith, Generally, Both Angels & VC, what is mimumum amount they may consider investing ? average time for investment of their money ? minimum return on investment eg 15% they would like ? thank you, Imran Hameed
Very good questions Imran – and I wish I could give you good answers – but there are none that I have found. I have seen angel investors initially put as little as $5,000 into a start-up. But that is very rare. They need to have a big enough investment to make it worth their time and support. Most angel investors these days are shy of pure start-ups. They prefer companies with an established team and revenues. Their preference is for a team that has proven their value proposition by actually getting customers to pay for it. Most angels will require that they own most or all of the equity initially and gladly provide for an ‘earn-in’ by the team. Angel investors need to see a path to a venture financing as this is their most likely exit. Hope this helps.
I have pitched my search for funds to a Venture Capital guy who liked my business and product but said I was not a good fit for Venture fund because me lead time to cash flow was to long (9 months).
Then I pitched to another who said he would work with me and that he believed I would do well in front of an Angel group.
No one talked about what kind of returns they would need. As I see it a Venture Capitalist and a Angel Investor are the same thing. Could you tell me what am I missing?
Best Regards,
John Geisler
Ps: On the subject of a Board of Directors. I worked for Lear Corporation and the CEO took that company from $72 per share to less then $2 per share and into bankruptcy. That board never moved to toss the dummy out.
John, angel investors are generally early stage players – they tend to invest in start-ups and focus on the technology or the value proposition behind it. Most of them pick an opportunity because they believe in the CEO or founder. An angel investor is usually investing his own money or the funds of a group of angel investors. Venture capitalists come on lots of versions. Some invest in companies that have a relativity short history but have managed to generate a profit. Others prefer mid-market companies with run rates in the twenty to two hundred million dollar range. Still others focus on management buy-outs or leveraged buy-outs. Their common characteristics are that they are heavily ROI focused and are investing funds provided by institutional investors such as pension funds. VCs tend to be more professional – angel investors often spend a lot of time coaching young CEOs.
I found your articles very helpful. I have worked with small busiiness for over 20 years and have insisted that the businesses have at least a voluntary board, and that is usuallay a challenge. But once the that voluntary board is in place, taking them to the next level seems much easier. A good Management team and Board of Directors. can then do their work and move the business forward at an accelerated rate.
I will pass your articles on to some of those I work with.
Regards
Russell Schmidt
100to1.net
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