Human capital can also be assessed under the domains of knowledge, skills and attitudes. Knowledge – A well-rounded team will include individuals with extensive domain knowledge of their industry, business acumen, customer understanding, ability to sell, and technical/operational expertise. This is normally assessed by years of experience, previous positions held, degrees, and continuing education. I like to ask what books the entrepreneurs read in their spare time. According to Mike Volker from VANTEC in Vancouver: “I compare Angel investing to having open-heart surgery performed on me – I want experience! Who wants a surgeon who’s never done it before? At a minimum, they should be aware of what they don’t know. I’ve seen too many companies fail because of know-it-alls.” Frank Erschen disagrees: “Most early-stage companies do not have well-rounded teams and often the teams will not have material previous experience. Sometimes too much experience is a bad thing. I would rather invest in fearlessness than experience. A company can always close the experience gap – and usually does with investment. But you can’t fill the fearlessness gap. It has to be there from the start and at the top.” Skills – This is far harder to assess, but could include assessing teamwork skills, emotional intelligence, communication skills, critical thinking and problem solving, agility, persuading and negotiating, and self-management. Every Angel has his or her own opinion about what skills are most important. Add to Your Reading List See The Five Dysfunctions of a Team (Lencioni) to gain new insights into ensuring peak team performance. See also The Five Temptations of a CEO (Lencioni) to understand how to avoid “founderitis” (when founders refuse to step down or admit that they are a barrier to their company’s success). Attitudes – This includes passion (or obsession), grit, tenacity, fearlessness, integrity, character and, above all else, honesty. See the due diligence assessment tool in Age of the Angel (2010). One of my favourite specific suggestions was given by Mike Volker: “I bring the entrepreneur home for dinner and if my wife thinks he or she is a jerk, we don’t invest!” Personally, I also invite the entrepreneur’s spouse to that dinner and find that I often learn more from the spouse than I do from the entrepreneur about his or her character. I think Karen Grant of Angel One Investor Network summarized this well: “Relationships are everything! Relationship success is the greatest indicator of overall deal success.”
How to Achieve Good Returns
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