Angel Investing – Rules for Investing

stockpile 05There are many screens that angel investors employ when trying to decide which investment opportunities make sense for them. Selection criteria often include:

  • The “big” or “disruptive” idea
  • Quality Management Team
  • Large addressable market
  • Significant barriers to entry
  • Plausible Exit Strategy & “reasonable” valuation

In a recent article published by Women 2.0, fellow Golden Seeds member Adam Quinton discusses the following three “emerging rules of the game” that he incorporates into his investment decision-making  process:

  • Diversity Matters: Adam, as he describes himself, is “a big believer in the decision-making benefits that stem from diversity of thought. When it comes to tech and on the gender front that means having one or more women as a key players on the management team and as a founder/owners.” There have been several studies, including the Harvard Business Review article referenced indicating that having women on the team makes the team smarter. At the recent  World Economic Forum held in Davos, there was much discussion regarding the economic clout that women wield globally.
  • Having Multiple Founders: In his second emerging rule, Adam believes that:”Multiple founders, and crucially complementary ones, are likely to have much better success rates.” There’s an old cliché that “it’s lonely at the top” and this can certainly be the case for a sole entrepreneur who does not have a colleague to collaborate with or share the burdens of getting a new business up and running. 
  • Passion is Key: Finally, in Adam’s view: “When it comes to founders, yes their domain expertise matters to me. But passion and commitment matter I think much more than most of the resume.”   Anyone who ventures into the world of angel investing soon learns that there will always be challenges that test the true mettle of your portfolio company’s founder(s). It is critical that they have the passion and stamina to continue to drive the business forward, “pivot” when required, and remain focused on success!

You can read Adam’s full Women 2.0 article here and also follow Adam on Twitter @adamquinton

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