Over the past five years, I have had the privilege of meeting and working with hundreds of angel investors. Armed with this recent experience, I felt it would be a great honor to help new entrepreneurs and budding investors themselves better understand what four characteristics to look for in a rock star angel.
Most entrepreneurs find satisfaction in expressing their ideas and bringing their brand and innovative products from pencil-to-production. On a daily basis, we are bombarded with national headlines that highlight entrepreneurial rags-to-riches stories. The sad truth about the journey is that it is grueling, gritty and far from glamorous. True entrepreneurs are obsessed with their craft and have the stomach for the entrepreneurial roller coaster ride.
I have found that one of the keys to entrepreneurial success is having the proper resources and partners on board. This is especially critical during the formation and early stages of a ventures growth. During this phase, the support of angel investors can play a critical role in a company’s success.
If entrepreneurs are the engines of economic growth, angel investors are the gasoline to the economic engine. Strong angels typically have many or all four of the following characteristics:
They Are Not Just Committed to Raising Capital
The strongest angel investors that I have worked with are committed rather than merely interested in the business that they invest in. These angels exhibit empathy, engagement and loads of encouragement during the formidable years of a fledgling startups growth. Interestingly, I have found that investors who exhibit these characteristics typically have prior experience founding and growing businesses. Such angels have startup blood running through their veins, want to stay close to the startup game that they love, give back to the vocation that ignited their souls and provide direct benefit to the vibrant, innovative, growing startup ecosystem in their community.
Look for angels with past entrepreneurial experiences and who can spend time with your founding team and employees. This will make them helpful in both identifying challenges and recommending solutions. In the early stages of a company, these challenges are not always business problems but rather often work-life balance challenges. Ambitious work schedules can result in difficulty maintaining your work-life balance. For instance, one of the best angel investors I have ever worked with recognized my work-life imbalance and actually recommended I spend more time with my family, especially during the weekends. This angel recognized that in order for me to function most effectively and in turn maximize his ROI, he wanted me to maintain a healthy work-life balance.
They Are Proactive Network Activators
In order for a startup to succeed, the CEO needs to be able to recruit and retain the best talent. The talent includes new employees, new strategic partners, advisors, board members, potential acquirers and even new investors. Angels that open up their Rolodex (or function as “Archangels") and make warm introductions can make a big difference when it comes to startup business growth. One direct way to assess an angel's connections is to ask them about past deals they have done, conferences they attend and potential partners that they would be interested in putting you in contact with. Another way to assess an angel's experience is to use online directory platforms, such as gust.com and angel.co. These platforms allow you to research, connect and pitch to reputable, connected angels. In addition, you can check out a potential angel investor's online presence, blog, connections and followers on Linkedin, Twitter and Instagram. One of our strongest angels/mentors consistently made warm introductions to leading CEOs and business leaders in the industry.
They Push for Brand Awareness
Brand momentum is a product of mass and velocity, and startups inherently have a low mass and require high-velocity partners. The recent growth on online and social media sites allows news to spread considerably faster than in past years, and angel investors can play a supportive role to the companies that they invest in by spreading the company news via their social media channels (Facebook, Instagram, Linkedin and Twitter). One way to encourage partners to spread the company news is to tag them in company posts and send them links to recent news stories directly and ask them to share.
They Provide Financial Capital
Last but not least, a rock star angel investor puts their money where their mouth is and actually writes big checks.
The support of a few rock star angel investors can mean the difference between a company’s success or failure. Be selective in the angels you work with on your journey. The strongest angels are committed, empathetic, encouraging and engaged. They stand by the entrepreneur during difficult times and work to overcome setbacks. They maintain open communication with the entrepreneur and proactively make valuable introductions from their network. They are committed to helping you spread the great news about your brand and company products. Finally, they write big checks so the entrepreneur can focus on the most important aspect of the business -- the business itself.