Oct 102004
Angel and Strategic Investors
Angel and Strategic Investors
While I and others have recently done a number of postings on Venture Capital investors and their relationship with entrepreneurs, I thought I’d do a posting on handling other kinds of investors — angels and strategics.
Angel investors. My definition: high net worth individuals who put personal money into a company. The good: they’re typically your friends and family, so they don’t play hardball when negotiating terms. The bad: they’re typically your friends and family, so every dinner party you attend has the potential to morph into an ad hoc investor relations conference. The ugly: you feel awful if you lose their money or dilute them down.
Strategic investors. My definition: operating companies (not investment firms) that invest in other operating companies. The good: they’re typically some kind of business partner, so if they have a stake in your company, they will be more likely to help you. The bad: the person at the comapny who made the investment decision is usually a different person than the person with whom you conduct business, so the incentives are rarely aligned the right way. The ugly: unlike financial investors, strategic investors can change their philosophy about making other corporate investments for any reason or no reason and leave you without support in future rounds and with an unproductive player around the table that makes a future exit difficult by their mere presence.
At the end of the day, not everone is cut out to invest in startups. My biggest takeaways about these two types of non-financial/VC investors are:
1. Be very selective about who you let invest in the early stages of your company
2. Make sure angel investors acknowledge to you verbally (above and beyond the accredited investor rep they give you) that they are totally comfortable losing all of their money
3. Make sure angels and strategics understand that in order to preserve the value of their investment, they may need to continue investing in your company if you end up raising multiple rounds of financing
4. Without being unfair, try to limit the rights (or assign them by proxy to you or to the Board or to a lead investor) of less sophisticated financial investors who aren’t and won’t be close enough to your business to participate in major corporate decisions down the road. Along these lines, you should strongly consider selling both types of investors common stock, especially if it’s early on in the company’s life
I like your blog…and your company. Similar stuff. I’m going to link to it.
andy Sack
I have just started looking for investors for our next round of growth. I am spending $ on website listing and confs, ect. I may just keep kissing my local bankers ass and keep raising our capital from loans.
After working 20 hour days I just don’t have time to play the angel investor search game.
I am an entreprenuer seeking angel investor funding for my fitness equipment company. Who are they? Where are they. Help! I have a great product. Everything I find is about tech and software investors. Where are the investors in consumer products or sporting goods.
Great product.
As I was searching for Angel and venture capital investors. I came across this weblog that had the blog I wrote in August 24,06 about how to find investors for my fitness equipment company. Well its two months later and still, nothing. All I get is servise oriented individuals( companies ) who claim that for x amount of dollars they can get me funded. If that is not fraud/scam. Folks beware of these service companies. Do your own footwork. Its no wonder the servise industry is the largest industry in fraud/scam claims and profits.
Still looking for legit investors. Great profit potential. Great product.
We all are very well aware about the potentials of Indian economy. This can be seen by the sudden splurge of ventures in India in various forms like VC, start-up businesses, Angel Investment and so on.
Angel investments even a newer concept as masses are still not aware what angel investment is. Angel investor looks for new and innovative ideas that can be proposed by any one i.e. a person who want to start up his own business or by any one who is already in the business.
However to reach angel investors is not a cakewalk. Angel investors are highly skilled people in their own areas and they are not easily accessible. In India, there are very few options where a person can such investors or try to get funding. It seems like there are a few firms, which provide you with such resources.
I came across such a venture, which startled, as it seems they help you with all the necessary services, which are required to start-up a business. They have also given the outline as to how to pitch to investors, patents, copyrights, information etc.
The website is:
http://www.pitchindia.com
We all are very well aware about the potentials of Indian economy. This can be seen by the sudden splurge of ventures in India in various forms like VC, start-up businesses, Angel Investment and so on.
Angel investments even a newer concept as masses are still not aware what angel investment is. Angel investor looks for new and innovative ideas that can be proposed by any one i.e. a person who want to start up his own business or by any one who is already in the business.
However to reach angel investors is not a cakewalk. Angel investors are highly skilled people in their own areas and they are not easily accessible. In India, there are very few options where a person can such investors or try to get funding. It seems like there are a few firms, which provide you with such resources.
I came across such a venture, which startled, as it seems they help you with all the necessary services, which are required to start-up a business. They have also given the outline as to how to pitch to investors, patents, copyrights, information etc.
The website is:
http://www.pitchindia.com
I think I’ll print this blog and submit it along will future business plans to angel investors. I wouldn’t change one word…