What’s good with you my dear reader, I hope you’ve had a fruitful and eventful week. The past couple of weeks have been hard on me, but I’m trying my best to stay afloat. As we continue to explore the pages of Amis’s “Winning Angels: The Seven Fundamentals of Early-stage investing” the next chapter we’re going to dive into revolves around a word that carries a lot of weight, which is value. I am totally a believer that the world places too much emphasis and importance on the value of people, things, and entities. For angel investors and entrepreneurs this is something that we must constantly assess and evaluate if we expect to see returns on our investments. Let’s get into it, break it down, and as always let me talk to you about … VALUE.
As we get into the first couple of pages surrounding this section, we dive into the approaches of valuing which are quick and easy, academic/investment banker, professional venture capitalist, compensated advisor, and value later. For angel investors in this section is all about the approach and as an entrepreneur I identified where I might be able to catch my angel. I homed in on the “compensated advisor” as the angel I’m seeking has to be someone who sees me AND my vision. I want to have my angel investor become involved (if they can) with my organization and I want them to feel the progress as we grow.
As we continue this chapter, the next portion I would like to highlight is the four levers of early stage returns, which as the book states “they all have to be on in order to get the win.” The four levers include whether you choose winners, how the deal is structured, the price you pay, and how much dilution occurs. Out of these levers, one stuck out to me, which was “the price you pay” and it actually inspired me. This lever is primarily based on return of investment (ROI) and one of my strengths is “selling the dream” as I feel after amassing years of marketing and promotion experience, I can sell water to an ocean. Angel investors look at the possibilities more so here as an investor is willing to invest 10K so it might become 100k. I believe when I get the right formula, I can give that angel a warm and fuzzy so both of us can look forward to brighter futures (and hefty returns).
Finally, the chapter continues with “things to think about” which include an option on the entrepreneur, industry, future financing rounds, and exposure to future relationships. The one that appealed to me was the last one centered on relationships. I believe angel investors are always on the lookout for those who know their industry or have deep contacts. To me people can be just as valuable as resources so me showing the angel investor how I develop, foster, and maintain relationships is a unique selling point. Whether you’re an angel or entrepreneur, what do you value and where do you find your worth should be important. Let the world be.
Reference
Amis, D., & Stevenson, H.H. (2001). Winning Angels: The Seven Fundamentals of Early-stage Investing.