Angel Investor Series- Supporting

Hi Friends,

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?

Thank you for stopping by and reading my blog. 

Until Next Time,
Dani

References:

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

8 thoughts on “Angel Investor Series- Supporting

  1. Tony

    Dani,
    Nice review and could not agree more. The idea of starting a company is exciting and scary, but it would feel better knowing there was someone there to assist when needed without including the concern of them trying to take control of the company. I would imagine their role might change if the company was truly headed south and they felt they could turn it around, but having some breathing room and a professional support system seems nice. I think the coach role is also quite helpful, like having a built-in mentor.

    Thanks for the read.

    Like

  2. Carter Jones Huchko

    Hi Dani,

    I can totally understand why a reserve force seems the most interesting to you. I too feel like that or a coach role would work best for me as well. When thinking about an investor we tend to only think about the financial impact but the value of the experience of that person can be just as important. I really enjoyed your quote “smooth seas never made for a skilled sailor.” I think this rings true to our whole entrepreneurial experience and at the end we will all become savvier business people because of our bumps in the road. I look forward to reading more of your blogs.

    Carter Jones

    Like

  3. Tom Huchko

    Dani,

    I feel like the silent investor is probably the most common unfortunately! I think that most investors get into investing because they simply do not have the time to start their own venture, or maybe they do not have any interest themselves. They likely just want to put their money in the hands of someone they trust and not think about it for a while. This is great when you have an extremely experienced entrepreneur at the helm of the company, but what if they person is less experienced and needs guidance when times get tough?

    I believe that the coach is perfect for this situation, and still allows the investor to not sink as much time into the company. This is the role I would want for anyone who invests in me. I am still at a point where I have so much to learn and it would be great to learn from someone very experienced.

    Thank you,
    Tom

    Like

  4. Kari

    Dani,
    I, like you, think I would prefer the reserve force type of support from an investor. At least initially, that is. It seem as though you and I have similar work ethics. The kind of hands on, figure it out kind of work ethic. I get joy out of figuring out things on my own. However, there are times I know that it would either take too long to figure out or I just don’t have the resources to figure it out on my own. So in those instances, a reliable source would be nice to have around. I don’t think I would do well with a controlling investor. I’m not the type that appreciates someone hovering over me. It seems as though they don’t trust me to the job correctly.

    Like

  5. Hailee Barbarits

    Dani,

    I do like the reserve force as well. I would be open to a coach, and maybe even a full/part time team member if the opportunity came up. Depending on how comfortable I felt and the benefits the angel investor could offer me, I would be open to many options. I know what I am doing at times, would love to get help/feedback, but if I could also have someone to learn from/communicate with to develop myself, that would be great. I understand that sometimes, there are things that I just can’t teach myself, and someone with more experience could offer some great advice, which could save me time and money!

    Like

  6. exwalton1

    Dani,
    Great recap of the different types of investors. I believe starting out I would like to learn all that I can so a coaching investor would be ideal for me. Understanding that many investors invest so that they can be hands off, this may be a bit difficult to find.
    Essence

    Like

  7. FindingMonday

    Dani,

    You make some great points about the reserve force investor and I appreciated your personal example. My preference is the silent investor. Not saying I am the type to take the money and run. I just like to eliminate any possibility of a controlling investor.

    -Caitlin

    Like

  8. AK

    Dani,

    Selecting a preference for you as a business person in relationship with how you would apply an investor to your *personal self AS a business owner* is a logical way to look at it omnisciently. It is a view of the wider perspective instead of just analyzing the different styles of investment to the company itself. I think that it should be intrinsic when analyzing investment.

    AK

    Like

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