“Given the adage, ‘start with the end in mind,’ it is critical that Angels recognize that the most common successful exit (more than 80% of cases) is being acquired by a company in a related business that can drive more value from the venture than the company can achieve on its own. This has significant impact on the way the early rounds of investment take place, the strategy of the business, and the initial term sheet. Even before attracting its first round of investment, a company should be able to identify potential acquirers and what strategies or tactics it might take to engage those companies.” Mike Cegelski states: “I try to keep my post-investment level of involvement to a minimum. If you’re in there, it means they are having ‘issues’ and that’s a bad sign. I can’t really help 20–30 companies, so I’ve become an expert in delegation. I like to help with contacts and maybe sit on a board but I put my time and effort into making good deals.” 1.6 Personal Education Goals Lifelong learning is an important element of health and wellness. Angel investing provides ample opportunity to stretch your intellectual muscles. There is much to learn about future trends, new technologies, new business models and new entrepreneurial tools. Staying on top of what is hot, and which companies are acquiring or merging with others, can be rewarding and pay off big dividends. Learning how to become a better mentor and coach can also benefit your personal life. According to Frank Erschen: “When you decide to become an Angel investor, you are also committing to a new wave of learning. Unless you are a former entrepreneur, or worked at a venture capital firm, or come from a mergers and acquisitions background, you are entering a new world.” NACO Academy provides an array of educational modules that can help you improve your Angel investing practices. These are usually half-day workshops, and many also offer online content. (See the list of NACO Academy modules in the Appendix.) Dr. Andrew Maxwell states: “Angels can learn a great deal about Angel investing – from each other, from research, and from the NACO Academy – that can help them identify superior deals, make good investment decisions, and guide entrepreneurs to achieve better outcomes. More-experienced Angels invest differently from the less- experienced and generally achieve better outcomes, creating a motivation to find ways to share knowledge and experience, as well as deals. “Angels with a knowledge of the basic aspects and terms of Angel investing will be better prepared for investing and will have more realistic expectations of investment outcomes. Angels who have a better understanding of their own motivations, strengths and weaknesses will be able to find promising opportunities where they can add the most value. Angels with a better understanding of both the investment decision process and the path to successful exits will be able to achieve a higher level of return on investment, while understanding how specific factors influence the likelihood of long-term success will improve the quality of their investment decisions.”
30 A Practical Guide to Angel Investing
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