Angel investors are an important source of capital for early stage startups. Without them, many startups would never get beyond the idea phase. However, not all angels are equal. There are many individual investors, but certain traits separate the average investor from the true angel.
A true angel not only enables a startup with fuel in the form of dollars invested, but also has the ability to make game changing contributions during startups critical early stages. Those contributions may be advice and mentorship, customer connections, and/or bringing other high quality investors into orbit around the startup. Founders should search for the angels that can augment their strengths, shore up their weaknesses and help them get whatever they most need to succeed.
Here are some additional qualities that set the best angels apart from the pack. The more of these qualities an angel has, the more desirable, from an entrepreneur’s perspective, they are to have on your extended team:
They invest in people not companies
From my experience, the most successful angels and those that are the most fun to work with, invest in you and your team, not your company. The first angel who shared this investment philosophy with me over a decade ago was Eric SIlverman.
They are in the game for more than the money
Now, if you want to make money, it is important that your investors care about the money they are investing, and that they want to make money. If they don’t make money, you don’t make money. However, they aren’t in it FOR the money. They are playing the angel game because they are addicted to it. They love working with startups and entrepreneurs, and their primary goal is to make you successful and have fun doing it. An angel whom I met recently who appears to hold this as a cornerstone of his investment philosophy is Semyon Dukach.
They have a strong network or expertise that they can use to help you grow your business
The best angels bring far more than money to the table. They use their resources, connections, and skills to contribute to your company’s success in game-changing ways.
They are individual decision makers
They may rely upon a few key confidants or domain experts, but generally speaking, the best angels have cultivated an ability to understand a company and do the research to make their own decisions. The Providence-based angel, Angus Davis, is a great example of an angel who acts clearly and decisively in his investment activities.
They make decisions informed by the present, and they do it quickly
Great angels don’t wait for more information. They take the information available at the present time, and they give you their decision. There is nothing more frustrating during the fundraising process than an investor who options the future by either not saying no quickly or not clearly communicating what they need to see before they will invest. The best angels are clear and transparent on this front. Bill Warner, a Boston-based supporter of entrepreneurs everywhere, exhibits this quality consistently.
They have been an entrepreneur and started a business like yours
The best investor in your early-stage startup is someone who understands the path that you are walking. If you are starting a high-growth tech startup, then investors who have founded high-growth startups are going to understand the challenges you will face better than those who have not. They will viscerally understand the highs and lows that come from growing an unproven business, and they will be able to provide valuable advice during both the ups and the downs.
They understand that there are multiple paths to success
They might have taken VC or angel funding, or perhaps bootstrapped a business, but they understand that no two startups have the same needs. They can apply their unique experience to your unique experience without needing to project their experience onto yours. Jean Hammond is an experienced angel that thinks creatively on this front.
They respect your time
Because the best angels understand the demanding nature of a startup and that your primary goal is to build your product and prove the market, they don’t treat their time as more important than yours.
What traits have your best angels had? Please share them in the comments of this post.
Owen Johnson is co-founder and Managing Partner at Betaspring. His past ventures include Investment Instruments Corporation, provider of online residential real estate services Rentomatic.com and Rentometer.com; and Interdimensions Corporation, a high-growth interactive agency. In 2004, he founded Connect Providence, a group helping to connect newcomers to the City of Providence, RI. In 2009, he started the Providence chapter of the Awesome Foundation. He serves on the board of directors for Location, Inc., the Providence Community Library, and the MIT Enterprise Forum of Cambridge. He regularly mentors aspiring entrepreneurs, has been a team mentor for the MIT 100k Business Plan Competition, and a business plan judge for the Brown Entrepreneurship Program Business Plan Competition. Owen holds an S.B. in Electrical Engineering and Computer Science from the Massachusetts Institute of Technology and is an active member of the MIT alumni community.