Supporting: The 6th Fundamental
The sixth fundamental of giving support as an angel investor lies in helping to guide the entrepreneur to increase the chance of success for the startup.
While the benefits investors bring on board can enable the startup to progress, the text highlights the different types of investors and their roles by highlighting the uniqueness of each role and its benefits to the entrepreneur.
The silent investor– who only desires to see his returns on investments, tends to portray a lack of interest, while the reserve force investor positions as a strategic advisor offering practical expertise on raising capital from high-impact investors. The team member investor provides functional knowledge in helping to run the startup until a proper manager is hired. In contrast, the coach investor provides valuable advisory and strategic guidance due to their experience and high level of impact. The controlling and lead investor tends to take the organization’s reins from the board level or oversee organizational operations. Regardless of the investor’s typology, the authors constructed angel investor participation into five variants: advisor, mentor, investor, board member, and networker.
The role of each investor type relatively ends up fitting into that of an advisor who can provide a wealth of value to entrepreneurs in such a way that it can help startup companies provide the entrepreneur with access to existing networks, resources, and expertise, assisting the startup in identify and address challenges, building relationships, and accessing resources.
As a mentor, an angel investor can support and guide on what and what not to do while providing necessary oversight that the entrepreneur can use effectively to improve the startup’s strategic advantage.
The board member angel investor tends to provide strategic assistance to startups, helping them make decisions that will lead to long-term success because this can be invaluable for startups trying to navigate the complex world of business.
The investor typically provides financial capital to a startup that can help grow and scale, giving it a massive advantage of reaching its full potential.
At the same time, the networker is powerful in helping the startup or its entrepreneur connect with a community of potential investors, customers, partners, and groups that can contribute to building visibility and connection for the startup company.
The angel investor wields much influence concerning improving a startup’s chances of success by assisting with identifying and addressing issues, developing partnerships, and gaining access to resources.
The text further discusses the attributes, benefits, and considerations associated with each role which serve as milestones in the development of any new startup able to create value for investors.
Referred to as value events, these include product launches, sales milestones, and the acquisition of other companies.
A value event can boost the startup’s position by helping to create visibility to intending investors and the public, which can lead to an increased interest in the startup’s product or service. Developing visibility via a value event is influential in establishing or enhancing credibility for the startup by demonstrating progress to potential investors while simultaneously improving the morale of the startup team, thus providing them with a sense of accomplishment. Value events happen in different forms, including board meetings, advisory boards, one-on-one meetings, and social events. Regardless of how the value events occur, the aim is for the entrepreneur to have access to support opportunities (funding) for the startup company, including access to a community of assistance and help via connecting with potential investors and customers. Value events also open the startup team’s access to strategic advice, direction, counsel, and support.
Furthermore, different types of businesses showcased at value events were expounded on, including product business, service business, retail business, and e-business.
These types of businesses come with their peculiarities and structures. Regardless of the type of business, entrepreneurs need angel investors’ support to succeed, and there are many examples, like Airbnb (founded in 2008) and Uber (founded in 2009). These companies were collaborations that received support from a group of investors, allowing them to grow their businesses to become successful startups.
In Africa, companies like Flutterwave, Opay, Interswitch, and Kuda are examples of startup fintech companies that rose early to disrupt the fintech space with solutions.
These African startups were born out of investor support systems such as the Tony Elumelu Foundation and Goldman Sachs, examples of groups that discovered entrepreneurs via value events showcasing the concepts they presented.
While winning angels are known to bring a deep wealth of expertise in understanding the startup market. Angel investment offers a unique way to raise funds for entrepreneurs. Yet, an entrepreneur needs to conduct necessary due diligence and research while having the startup goals in sight, determining the type of support the business needs, and the risk involved with having an angel investor, including knowing how to evaluate investors.
Ultimately, having investors support the entrepreneur often provides the needed capital and strategic input for building products that are minimally viable, scalable, and embraced by customers.
Regardless of the level of involvement of an angel investor, the end point is for the ‘supporting’ process to culminate in startup growth and success.
Resources
Amis David, Stevenson Howard. 2001, “Winning Angels The 7 Fundamentals of Early Stage Investing”, Published 2001, Pitman Publishing
