Angel Investors - more than just money

I am an angel investor and belong to several angel investor groups in the greater Boston area. Last night the eCoast Angels of seacoast New Hampshire had a dinner meeting to celebrate their 5th anniversary as a group. The group has 15 to 20 members, all serial entrepreneurs, all have made money building and selling businesses. They are active investors and active participants in the businesses they fund. This is what sets them, and most angel investors, apart from VCs or institutional investors. They commit significant personal time to building these companies, usually with no compensation.

I am also a member of Keiretsu Forum which is an angel investor group with local chapters in Boston, Silicon Valley, Los Angeles, Chicago, and several other cities. Other angel groups in the Boston area include; Launchpad, Common Angels, The Breakfast Club, Walnut Ventures, and several other smaller groups.

Angel Investors are a special breed. They are usually experienced entrepreneurs that have built and sold several companies. They are typically retired or not currently running a company. They love to start companies, solve the tough problems, build a great team, and be actively involved in finding customers, partners, and key employees. They tend to invest in companies that are within a one hour drive so that they can be actively involved and leverage their network of friends and business associates. If they can't commit their time and be actively involved in the major decisions of the company, they will probably not invest.

Angels invest their own money, time, and experience in a company when few others will. They take on the riskiest investments at a stage that VCs will not engage. That is why they call them angels. For a struggling entrepreneur they are heaven sent.

Angels are compassionate and have a soft spot for budding entrepreneurs, but they are not stupid. They have discipline. They invest in what they know, where they can apply their experience, and in deals where their money can have impact. They don't tend to invest as part of a larger round with VCs, or in areas where they have no expertise. They will pass on good deals where they can't add value or have significant impact.

VCs tend to think the same way, but on a much larger scale. They have lots of money and limited time, so they need to focus on larger individual investments ($2M to $5M per round) where they get a board seat. They stick with areas they know, and where they can add value.

The rub comes when Angel funded start-ups get to the point where they need VC money to get to the next level. The angels sometimes don't want to let go, and the VCs need to take control to add their value. Board control is sometimes an issue. Most of the time the entrepreneur, the angels, and the VCs are pragmatic about what needs to be done, and agree on a structure that leverages everyone's value.

Angels and VCs can be critical partners in building a successful business at different stages. As an entrepreneur make sure you know what stage you are at and what help you need.

Comments

[Joe Hunkins]

Great Blog Don!

Although most would not agree with you that MSN is equal to Google/Yahoo quality results I'd certainly agree that MSN is catching up and will be equal soon.

It's possible MSN's Neural Network approach could prove the best solution though I'm now leaning towards Yahoo's hybridized search results which include editor review, Algorithmic routines, and soon the robust "del.icio.us" bookmark tagging. Yahoo is going for the knockout punch here with a system that may be able to bring high quality deep into the results. No engine has come anywhere close to that for commercial terms and most fail for that even on non commercial terms.

However, if MSN chooses to pay users in some reasonable proportion to their market value you could trump everybody - and fast.

[Katherine Hora]

I have a new product business which will be lightweight, durible, inexpensive, unisex, and it will help stop the rise of skin cancer. I have signed a letter of confidentiality, with a company called Davison and they will receive 10% of my profits. Now I don't think they would have done that unless they thought I could make us wealthy. I am not at liberty to explain more but I would like to ask you for your help,now.
Thank you for your support.
Respectfully,
Katherine

[Don Dodge]

What kind of help would you like? This doesn'r sound like a software product or service. I might be able to refer you to some angel investors if you provide more information. Email me, ddodge at microsoft.com and I will see what I can do.

[Arturo]

Grettings from Colombia

Excuse me for my bad English, but i learned it by myself.

I am making a independent film o low cost in Colombia, called "Jesus, The Return", but i´ve had many difficults for keep in, for that reason i need contact with a producer (or Investor Angel) out of my country, here in Colombia is very hard to get finnancial for film projects, but also is many cheap the produccing of new project.

The project has finnancial analisis VPN: + , TIR: 17%. TMAR: 15%, in worst of scenaries (Geeting money in a Bank),

Jesus, The Return is a commercial project. It will have a good return about money, about $5M


I need a producer, the cost of project is very low compared to anothers.(US$ 400.000 Digital, US$800.000 Film) with 25 film copies. Is not religious, no political, is only fiction. with respect to all religious movements in the world. thougt it too have implicit messages about the messages of Jesus, without come in religious, political, economics, i´ve worked on it about 8 years.

At this moment for complete the film (pre an prodution fases) i need less of innitial K, i´ve inverted about $100.000,

If you are interested i wiil translate to English all information and i will send it.

The film will be a beatiful movie, i pretend with it change the mind of the world about my country and the people, the people in Colombia is poor, but not neccesary robbers, narcotraficants, killers or bad people. The most is good people.

We are equals to another country. We have big cities, Bogotá have 6.000.000 people. My city (Medellin) have 2.800.000 and we have Metro. one the most clean metro in the world, Highways, and With the utilties of the film, i will create a fundation to help projects like this, also social projects too.

On fact, the project will be create about 150 temporaly jobs for 4 months, and 25 jobs for two years, and i´m sure of it, we´ll keep in making projects, The idea is create a first Producing Company of commercial films of low cost, and in about five years we´ll making about 3 projects for year


Thank you for read this

Arturo Zapata
Photographer - Graphic Designer TV Producer
Medellín - Colombia

arturo50mil@yahoo.com.mx


Thank you again.