2015 Tech Coast Angels Chairman Michael Green Recently Shared His Views about Angel Investing:

  • Why Run-of-the-Mill Angel Investor Articles about Returns are Annoying and about Redefining Success
  • Angel Traits and Experience Gained
  • Why to Trust the Wisdom of an Angel Network
  • The Real Life of an Angel Investor (hint: it’s nothing like Shark Tank)

See the PRWEB’s write up here. Mr. Green’s article is posted in its entirety below.

On Redefining Success:

We have all read the typical articles about “successful” angel investors, and almost all of them are about returns. The narrative is along the lines of how much was made on the original investment, how s/he was able to understand the vision of the company’s founder before anyone else and then, quite predictably, how that vision effectuated a complete paradigm shift…blah blah blah. REALLY? It’s gotten to the point now where articles like this simply annoy and bore me.

Returns are certainly one way of defining success, but it’s important to recognize that there are numerous other ways angel investors can be successful. Do I want to lose money? Of course not. I don’t invest in businesses that I don’t think will make it. But I do think that we need to rethink what success means, particularly in angel investing.

For me, success begins with the fulfillment I feel backing companies I believe in. It also comes from helping early-stage companies—either financially or by asking the right questions—go from little more than an idea to something sustainable. And sometimes it comes from being so inspired by a new company that may actually end up changing the world, that I can’t help but want to be a part of it.

Success also comes from learning from young companies – new ideas, new technology, new business models…it’s like a TED talk or a great news story that re-energizes you and forces you to learn about entire new industries and how they work. It’s about tapping into that passion and being able to use your expertise to add value to the enterprise when and where you can.

These are inherent benefits that to me spell success, far beyond returns.

On Angel Experience and Traits:

My business was nearly forced into bankruptcy during the great recession. Emerging successfully, I realized that that dark time gave me perspective about what my passion was and where I found enjoyment in business. I reflected back to the fun I had in an entrepreneur class during business school at Wharton where we analyzed business plans and cases and discussed them. In fact, what we did in that class is very close to what being an angel is about.

In 2011, I went to an event that had angels on a particular panel and was very impressed with what the Tech Coast Angel member had to say. I applied to join the network the very next day.

By and large, I think angels are intelligent and curious – you really do need to have a love of learning. Even when you are not an expert in industry or business that is being pitched to you, an angel should be able to use his business experiences and offer valuable questions or comments from a perspective that someone in the midst of building a business hasn’t thought of. I also think a level of people skills—things like communication, tact and honesty—are very important too.

There is a stereotype that angels can be slow to act or make it difficult to get deals done. But I think that’s an outdated image. Many of today’s angels are young and have often times experienced exits with their own businesses. They are also looking to mentor and help young companies with their relevant experience. At TCA, we’re extremely quick to get deals moving forward, manage the entrepreneur’s expectations, and make decisions. Last year we funded almost $3 million in a company in just three weeks.

On The Value of a Network:

The wisdom of the crowd is real. I can testify first hand that the diverse backgrounds and experience of our TCA members (our group consists of scientists, patent lawyers, engineers, MBAs and a myriad of other experts in almost anything and everything) really adds value when analyzing each business. I can’t tell you how many times I’ve listened to a pitch and thought to myself, “I am loving this,” until one of our members brings up a point of concern and I think, “Wow, that is a great question—I can’t believe I missed how huge a problem that is.” My learning curve has improved exponentially, and although I form my own opinions, I feel that I’m able to make far more informed investment decisions with the group discussions and analysis.

A network is also going to be generally better than just one person obtaining deal flow. TCA receives almost 1,000 applications per year and the pre-screening team carefully filters those applicants so that members spend their time only looking at the most promising companies. Also, by sharing the due diligence amongst the members, it enables them to participate in more deals than if they had to gather and analyze all of the diligence materials for each company they were interested in by themselves.

What It’s Like to Be an Angel and Why It’s Nothing Like Shark Tank:

Television does not do angel investing justice. It is hard to describe what a screening is like, but it’s nothing like what you see on Shark Tank. It isn’t a media circus that pits a polished presenter against a tiny group of antagonistic investors. While the conflict and drama of Shark Tank may make for great TV, what it sorely lacks is the optimism and excitement that is inherent in hearing about new ideas and business models.

To be sure, my involvement in TCA has taught me tons about startup investing, but I’ve also learned about legal and finance issues around structuring early-stage investments. I’ve learned about different businesses, and business models, and that learning is never-ending.

Being around dynamic, interesting, passionate entrepreneurs with cool new ideas can be inspiring and can give you a rosier outlook. For me, this exposure has made me much more open-minded in my own business when evaluating a new idea or risk, and less likely to paint a negative narrative. For example, during one TCA pitch I learned about new strategies regarding customer acquisition which enabled me to think differently about employing some digital marketing strategies with my own 14-year old lending business. As a result, I decided to run six small tests in different channels to acquire customers like a startup. And two of these strategies have real promise. I find that I now have a much more creative lens when exploring new opportunities.

If you’re interested in becoming an angel, I recommend that you find an angel network geographically close to you and attend an event, preferably a screening, as a guest. This will give you a very good idea of what it’s like to be an angel. You will hear some great, and some not so great, presentations. You will listen to productive questions from smart investors, you will hear responses from entrepreneurs that you like, and some that will make you cringe. You’ll probably want to go home and read about some facet of a business you didn’t know about earlier that day, and you’ll want to talk about it with someone. And who knows? You may even decide to apply to the angel group the next day. I did that very same thing five years ago, and it’s one of the best decisions I ever made.