The Supporting section of our book takes a deeper dive into the roles of angels and the five ways they can participate with entrepreneurs to help them succeed. It also references some specific tactics that winning angels can utilize to support their entrepreneurs in more detail.
There are two parts of this section that stand out to me as great takeaways. The first, is the five fundamental participation roles an angel investor takes to satisfy the needs and wants of the parties involved.
- Silent Investor- Purely financial, will take no active interest in the company, except to provide capital and hope for an ROI.
- Reserve Force- Ready, willing, and able to help when asked by the entrepreneur, and brings relevant knowledge or contacts to the table.
- Team Member- Works in the company on particular aspects of the business, or in a particular area of the business.
- Coach- Meets with the entrepreneur regularly and provides support or advice as requested by the entrepreneur.
- Controlling Investor- An investor who becomes the entrepreneur by taking control and manages the business.
The interesting aspect of these roles for an angel is that he/she may want to use more than one of these roles simultaneously to completely be affective with the entrepreneur.
The second part of this section that is a great takeaway is the more detailed reflection of what winning angels do to offer support to the entrepreneur, as stated in “The Winning Angels Study”.
- Give active support to the entrepreneur often at the strategic level.
- Emphasize the entrepreneur during the evaluation stage.
- Expect the 2X rule- costs twice as much, takes twice as long.
- Take care of the entrepreneur during the structuring stage.
- Build a team around the start-up, bring the right players to the game.
- “Own” the start up by bringing the right team, plenty of capital, and never giving up.
- Prepare for the later stages of the deal up front.
- Build monitoring into the deal, requiring monthly financial statements.
- Require a monthly one-pager showing the cash balance and what was accomplished.
- Monthly meetings solely focused on the entrepreneur and the business.
- Be a Cheerleader.
- Help the entrepreneur find and utilize advisors.
- Bring Venture Capitalists relationships into play when the time is right.
David Amis and Howard H. Stevenson. Winning Angels: The Seven Fundamentals of Early-Stage Investing. Financial Times Prentice Hall, 2001.
David Amos and Jocelyn Dinnin. The Winning Angels Study, 2000.