I'm your Angel - Tips of Dealing with Angel Investors
May 23 2008 | 2 comment(s)
The owner of a two-year old, Lijit Networks, had some wise words to say about angel funding. It dealt with the issue finding angels if you don't already have an established network as a really early stage company - a stage many innovators are when they apply to the Global Security Challenge.
The advice can be applied to most aspects of life and that is to try to understand the other person (in this case Angels) instead of assuming you know things about them, things like money must not be important to them. Here's a shortened version of what Todd Vernon from Lijit had to say about them:
The Family Investor: A supportive family member's motivation is likely out of support (sometimes guilt), but their basic investment thesis is they trust you. For me these are the worst type of investor because you likely have intimate knowledge of their financial situation and whether or not they 'should' be investing.
The Relationship Investor: The Relationship Investor is probably one or more co-workers from a previous gig or business friends you have known for a while. They may or may not understand what your new company is doing but they have had a track record working with you. In my experience these are good Angels to have, again as long as their eyes are open going in. These people can also be wildly supportive of you in terms of finding employees and other resources.
The Idea Investor: The Idea Investor is probably very familiar with the space your company is targeting. These are in some ways the very best types of Angels because to some degree they validate your idea. There investment is based on the Idea and there is little emotion around the table (always good). Often an influential Idea Investor makes a good early board member for the company.
The Once Removed Investor: The Once Removed Investor is likely connected through a personal or professional relationship with either the Relationship Investor or the Idea Investor. They likely don't know you, and they likely don't have a clue if your idea is good or bad but they have translated the trust in the investment to the person they know.
Arc Angel: An Arc Angel is a Relationship Investor or Idea Investor that has a track record of success making other Angels (and perhaps non Angels) money. These people are valuable as they can be very influential attracting quality Once Removed Investors. If you can find this person and get them excited about your deal, do it.He also pointed out that you can expect the amount of money invested to be smaller than what they initially committed to. So if you are really early stage, can communicate the risks and are willing to be open with people, then angels might be a good option for financing your business.
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Comments
July 21 2008 02:17PM by Jackie Ritson
Please do you know of anyone to help get my husbands invention into the market place.It is patterend worldwide and Ron Hickman of the black and decker workmate is co inventor, it is ready to go but needs someone to help and was due to be put before Dragons Den in July
Jackie Ritson
July 22 2008 12:08PM by GSC TEAM
Hello Jackie,
why dont you submit your idea to our Global Security Challenge's idea competition? It is accepting submissions until July 31 2008. Might be a great way to put your idea in front of people that can help commercialize it! and you have a chance to win $10,000 in a cash award if you are winning this competition category.
The GSC Team
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