Part of the beauty of angel investing is the idea that you’re investing in a person or idea that you can speak to, see, and interact with.
This as opposed to dumping your hard-earned cash into stocks, bonds, or mutual funds.
Investing in a company as an angel is an intimate affair. You commit only after a thorough due diligence process evaluating the potential success of the idea. You evaluate the talent and drive of the founding team. It’s about people, and the company comes to hold a special place in your heart.
Traditional investments like stocks? They’re just a ticker symbol in a chart, affected by powers far-removed from your own.
Right? Isn’t one of the best things about angel investing that you get to participate in how well your investment turns out?
It’s Not Just Your Money They Need
My ideal vision of an angel deal incorporates something much more than money. Forget about being a “passive investor”. That’s just as boring as a mutual fund.
When you put your money into a company, hopefully it’s partly because you feel it can benefit from your experiences in business. So you’ve grown 2 online companies through strong search marketing and sold them? That’s awesome, and you should be finding companies that can benefit from that experience.
Of course you’re not necessarily going to come in and be the CMO. But the 1 email per week you can give your entrepreneur could be worth $100,000 to the bottom line. The one answer per week that you can provide about a tough marketing decision could make all the difference in the world.
Go With What You Know
It’s only natural for people to be drawn to things they understand. In angel investing, that means you’ll likely gravitate towards companies that mirror your own past experiences.
That’s a good thing! Take your money and your advice to places where it’s mostly likely to be useful. I’m not about to invest in a pharmaceutical manufacturer, but I’ll jump all over sleepapnea.com.
Remember – You Can Contribute
The “passive” angel investor annoys me, especially if he/she bemoans the poor performance of their investments. If it’s your Energizer stock, that’s one thing. If it’s the $50,000 you put in 2 angel deals in 2008, well do something about it. I’m sure your entrepreneurs are open to ideas, help, connections, and insights. Get dirty!
(If they aren’t, sorry. Probably shouldn’t have invested to begin with.)
A big reason we coined “growth partner” is because angel investing is the perfect opportunity to actively invest. Embrace the opportunity to solidify your investment, and get dirty with your entrepreneurs.