Each Angel has a unique decision-making process for determining whether to screen out a company or enter into the negotiation and due diligence process. Most agree that some combination of the following factors strongly affects their decision: 1. Does the deal fall within my portfolio targets for amount of money, sector and location? 2. Do I like the entrepreneur/founders/team and trust them with my money? Would I enjoy spending time working with them? Are they coachable? Are they extraordinary? Are they passionate or obsessed? 3. Do I love the product/market space/vision? 4. Can I add value? 5. Is the opportunity big enough to get an attractive exit and provide sufficient return on investment? 6. Are there fundamental risks in the business that make it likely to fail? 7. Is there intellectual property or some other sustainable competitive advantage or barrier to entry? 8. Do I like the terms of the deal? the valuation? the structure? 9. Who else is investing in the deal? How well do I trust these other investors’ judgment or track record? 10. Is there momentum? Is there any reason to invest now instead of waiting to see a better deal? Is the timing important for any reason?
Angel Resource Institute Scorecard to Evaluate the Deal
Management Team – 30%
Sales Channels – 10%
Size of Opportunity – 25%
Need for More Funding – 5%
Product & Technology – 15%
Other – 5%
Source: Angel Resource Institute , Angel Investing Basics for the Startup Community
40 A Practical Guide to Angel Investing: How to Achieve Good Returns
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