So you just wrote the check! Now what?
There is a perception out there that angel investors and venture capitalists are only focused on monetary gain and don’t work to support the success of their companies post-investment. Angels are making investments with the hope of a successful exit and unfortunately the statistics on the failure of startups are quite sobering. According to Shikhar Ghosh, a senior lecturer at Harvard Business School, the failure rate of startups is 30-40%. ( Source: HBS Working Knowledge Article by Carmen Nobel). But in addition to the potential investment returns, angel investing provides a unique platform for engaging with the companies in your portfolio, which is not the case when investing in the public markets.
Although I can’t speak for all the angels out there, I feel very privileged to be part of the Golden Seeds Angel Network. If I had to synthesize our approach to investing, I would say that we invest with our hearts, our minds and our wallets. We are passionate about the entrepreneurs in whom we invest, we do extensive due diligence on the companies we consider for investment ( and provide training to our members though our Angel Investing Training) and then we WRITE CHECKS! Once we have written the check, the real work begins!
We consider ourselves to be in partnership with the entrepreneurs that join the ranks of our Portfolio Companies. With access to an incredibly diverse roster of members, our goal after writing the check is to help build great companies. We certainly don’t manage the day to day affairs, but we serve on Boards, open our “digital rolodexes” to make contacts and introductions, and call on the expertise of our membership, whenever it can be helpful to our companies.
Although no amount of pre-investment due diligence or post-investment mentorship and support can guarantee that our investments will succeed, we think that our approach both before and after “writing the check” certainly increases the odds.
Carol, I’m glad to see you adding your voice to the blogosphere. Can I suggest a topic for a future blog post?
Carol – In Rob Wiltbank’s seminal paper on which angels make the good financial returns, Returns to Angels in Groups, he noted that one of the key actions is staying involved helping a company post-check. He also noted that undertaking extensive due diligence and paying attention to red flags were also key – something that women generally excel at – Thanks, Kiki Tidwell
Thank you for this additional validation of both pre-investment due diligence and post-investment mentoring, here is the link to Wiltbank’s Paper.
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