Startup Secrets and Sh#$ to Know: Dear Investors, Entrepreneurs Spell Love “ T-I-M-E”
Aleckson Nyamwaya has his beat on the pulse of the startup world in Minnesota. He is an Associate at @gener8tor, contributor for @startupgrind, ambassador for @1millioncupsspl and a lover of all things tech & startups. We are pleased to have his monthly insight with our blog “Startup Secrets and Sh#$ to Know.” Check back each month for his thoughts, observations and featured companies.
Dear Investors, Entrepreneurs Spell Love “ T-I-M-E”:
The keys to becoming a prolific angel investor
Angel investors are an integral portion of the early stage funding community!
Who makes a good or bad angel anyways? Traditionally, this boils down to two things:
- Good Angels are great for seed money.
- Bad angel are great for money and additional headaches.
Return on investment VS community development
Think of angel investing as a means for community development. By helping small businesses succeed in your community, you help create jobs, wealth and help make your community more sustainable!
Money is great! It’s the crucial first step, but that’s not it. The truth is…
Giving entrepreneurs money does NOT buy you access, its only a small part of the equation. Yes, you need it and when you want it you want it badly and you care at that moment. But a year later when you succeed, you’ll clearly remember which investors helped along the way. Support is just as crucial as a financial investment because entrepreneurs spell love T-I-M-E. Did you spend time in making the necessary intros, were you a great sounding board etc.
Most investors (including VC’s) are not well acquainted with that reality or they have a reality of their own that makes it hard for them to spend that type of time. What will end up happening is the company will do worse, and your deal flow will dry up because surprise, surprise: founders talk to each other.
The role of an angel investor?
- Don’t worry about the mechanics — especially if you are starting out. Valuations don’t matter especially in the early stage. The whole point is to be helpful enough to get the company to the next milestone so they can raise more money!!
- Be decisive — don’t “strategically” string founders along. Make up your mind quickly and follow through.
- Do good. Once you invest in a company, all you should want to do is help it. Help people you haven’t invested in too. Just try to be helpful.
Instead of looking at angel investing as a form of high profits. Let’s change our perspective to looking at it as a way of giving back to our community. That way, we’ll have more ownership which will lead to added value without the headaches.
For reference, check out this great article written by Paul Graham on becoming an angel investor.