Winning Angels: The 7 Fundamentals of Early Stage Investing, Book Reflection Week 3

The Evaluating section of early-stage investing seems to have many complexities and covers a lot of ground. For me, The Harvard Framework is the most intriguing and offers the best practical use for a new angel.

I like how the framework begins with four basic components, and then breaks down the details of each;

People, the entrepreneur, the management team, and the stakeholders

Business Opportunity, the model, the customer, the size, and timing

Context, the economy, technology, regulation, and competition

The Deal, price, and structure

When I play any game, I want to win. I want to understand the rules and the best strategies to succeed. Investing can be very similar to a game with significant risk and reward, and one should do everything possible to prepare for how the game is best played.

William Sahlman provides a well thought out adaptation from Howard’s original framework for real estate, which if applied correctly, can significantly reduce the risk for the investor.  I feel like this model dissects potential business opportunities in a way that new investors can manage the information and come to logical conclusions based on the evaluation of these components.

David Amis and Howard H. Stevenson. Winning Angels: The Seven Fundamentals of Early-Stage Investing. Financial Times Prentice Hall, 2001.

William Sahlman. Thoughts on Business Plans. HBS Publishing, 1996.

3 thoughts on “Winning Angels: The 7 Fundamentals of Early Stage Investing, Book Reflection Week 3

  1. Good analogy to say “When I play any game, I want to win. I want to understand the rules and the best strategies to succeed”. I’d think that angel investors would have a similar mindset. With my cash I would expect to win. Anything less …. well, let’s not go there. Evaluating a deal is critical to winning the game.

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  2. Devon,
    I concur with your assessment of the Harvard Framework being the highlight of the Evaluating process. I think having a thorough understanding of these four factors pretty much covers the basic questions. While I believe there is no step by step guide as to how to evaluate an investment deal, I think there is a number of basic principle that should guide the process. The Harvard Framework helps significantly to achieve this objective.
    Best regards,
    -Jose

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  3. Hailee Barbarits June 17, 2019 — 6:20 pm

    I, too, thought they organized the framework well. I also feel like learning is better when it is hands-on, and it seems easier said than done on evaluating a business opportunity. When we look at a book, we are seeing a situation from a birds-eye view, which is clear to view all parts. When immersed in the middle of a situation, the concepts discussed may seem unclear. The best lessons are likely going to be through intuition and experience for a fledgling angel investor.

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