Grow Good Companies
Many Angels put more time into the company post-investment than they do pre-investment. Interacting with your investee company matters! If the “average” Angel earns 2.7X, those who interact one or two times per year get only 1.3X, while those who interact one or two times per month average 3.7X. (Wiltbank & Boeker) NACO Academy Module 304: Best Practices for Angel-Backed Companies identifies four primary modes for interacting with a company: governance, metrics, money and network. In each of these modes, the Angels are seeking to proactively add value to the company. This proactive approach is normally built into the deal and embodied in the shareholder agreement, and is in addition to any informal ad hoc involvement that individual Angels might have. (See, for example, section 1.5 – Co-Investing With Other Angels and Angel Groups , where some Angels say, “I give the CEO my phone number and expect them to call me whenever they need help.”) This approach to adding value is known as working on the company instead of working in the company. It is precisely this ability to be more objective, strategic and focused on the big picture that adds significant value, instead of working on the day-to-day emergencies. Of course, an Angel can also work inside the company as an officer or executive. But I’m looking at this topic from the point of view of the investor who is not part of the management team.
82 A Practical Guide to Angel Investing
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