It’s a New Year and time to make those resolutions. In addition to thinking about personal goals for the year, it’s a great time to review your angel investment portfolio. As angels we see many interesting investment opportunities and it helps to set a goal at the beginning of the year for the investment amount that you want to commit to this sector over the next 12 months. When setting this goal take into consideration:
- New Investments v. Follow-on Rounds: Depending on the composition of your portfolio, you may need to think about allocating capital for participation in a follow-on round for one or more of your portfolio companies. Follow-on rounds can occur for a number of reasons and may include positive events such as funds for expansion of the business as well as not so positive events such as cash flow shortfalls that result from missing planned revenue targets. Based upon the performance of your companies in 2012, you may be able to make an estimate of what funding will be needed and then determine whether you want to participate and what funds will remain for new portfolio investments.
- Diversification: Take a close look at your portfolio to determine if there are sectors that are under or over weighted. Depending on the amount of funds you are thinking of investing, you may want to consider joining an angel group to provide diversity to your portfolio. Take a look at the 2007 study released by the Kauffman Foundation and conducted by Robert Wiltbank of Willamette University and Warren Boeker of the University of Washington, entitled “Returns of Angel Investors in Groups“. A great source of information on angel groups is the Angel Capital Association.
In addition to setting your investment goals for 2013, make a resolution to support your portfolio companies! At a minimum, make sure you are a customer for the products or services that your companies provide. Give feedback for great and not so great customer service! Think about whether you can tap your network to make an introduction that could generate revenue. Also, take advantage of the many social media venues available to raise awareness for the products or services that your companies provide. As angel investors we have a unique opportunity to provide more than just cash to the companies in which we invest.
HAPPY NEW YEAR!