In continuation of my angel investor series, this week I am going to talk about supporting.
There are 5 participation roles that the investor can take on when working with the entrepreneur.
Silent investor- they are purely the financial investor. They will not take an active interest in the company except to sign paperwork and hope they see some returns on their investment.
Reserve force- they are always ready, willing, and capable to help the entrepreneur, as they are needed. The impact that they create is dependent on the relevant skills and contacts they have and that they are called at the right time.
Team member (full or part time) – they become a part of the team and work in the company on particular projects of in an area of functionality. This role can have a higher rick for micro managing the entrepreneur if the investor represents a majority interest or has a significant stake in the company. The impact they have depends on their relevant skills and contacts but also on the relationship, they have with the entrepreneur. This relationship will be tested in this situation and the angel will have a high to negative impact.
Coach- they are the highest impact investor who does not control the company. They will meet with the entrepreneur regularly and provide and assistance, support, or advice that they need. A new angel could have an impact in this role but it is usually best for an experienced investor.
Controlling investor- They have a high impact in this role. They pretty much become the entrepreneur by taking control, either outright or through conversations, and manages the company.
When it comes time for myself to have investors, I think I would prefer to have the reserve force investor. I am a hands-on learner and I like to do things on my own but I also like to know there is always someone there in case I have questions. When I started my current role, I was pretty much on my own. I had a 30-minute meeting with my predecessor and a binder with about 40 pages of information in it, that is it. I know I could have reached out to her if I had any questions but I also know that my boss wanted me to make the job my own. I think that it helped shape me into a good assistant, I say “good” because I can always be better. I would not ask for help until I had exhausted every option or resource I had available to me.
I believe that this makes for a great and skilled entrepreneur. No one became an expert at anything by having someone do everything for them or tell them all the answers. You will never learn that way and you will come to expect that as you grow. One of my favorite quotes is “smooth seas never made for a skilled sailor.”
This might be my favorite section yet. It got me to think about how I work as an entrepreneur and as a person. I enjoyed learning about the different roles an investor can take in the company. What role would you want your investor to take?
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Until Next Time,
Amis, David, and Howard H. Stevenson. Winning Angels: the Seven Fundamentals of Early-Stage Investing. Financial Times Prentice Hall, 2001.