Why should you give it a try at being a business angel?
Personal level: It is deeply rewarding. You get to work with dedicated and smart young people of your own choosing, in a field where you have something to contribute with. They will greatly value all your help and input, while having low expectations of concrete deliverables. They will also appreciate your cash investment, but beware that each other’s motivations and commitments are clear.Monetary level: The highest returns are always for those that come in early. The earlier the better. And yes, there is a clear risk of losing all money invested. But this is where your experience and contacts are key – you as the angel may just be what the startup critically needs to grow, to not go under. Angels are happy if they make 10x, 50x or even 150x. Investors are happy if they make 5x or 10x. This is a huge difference. Or rather – while investors are focused on the money, angels are normally also in it for the journey.
Educate yourself as an angel
There are many ways to become a better angel. Lots is available on the net. You can take part in structured programs like Angel Challenge in many regions of Norway. You can take part in pitch days at a number of incubators or co-working spaces across Norway.
Strategies and tips
Be clear about your commitment level, time available, money available now and later, willingness to actually use your valuable connections – and how the often young and eager startupers best should interact with you. Manage expectations before you agree to anything. Think portfolio – can your portfolio companies complement or help each other Think through your role, are you really an FFF, an angel or an investor? You may of course have different of these roles in different cases. But when do you have each of these roles? And when are you intending to move between these roles? What are your investment criteria? How set in stone are they? What does this make you in the eyes of the startup’er? What is your investment strategy? We should all invest in different baskets or categories of investments, balancing our portfolio of investments. How many % do you have in each basket? Risk profile for each basket? Right level of risk for each? How many % should you have in high-risk startups and in lower-risk startups? Rebalance? Are you ready for pre-founding, pre-seed or seed? Where can you add most value? Dealflow – how do you find your cases? Why do come to just you? Because they couldn’t get money or help from anybody else?Are you a founder, a co-founder, a consultant, a helper, an FFF, a subject-matter expert? Who are you in your eyes – in the eyes of the startup – in the eyes of the startup’s investors or partners? Who are you in the eyes of your own private and professional surroundings? Do you have alterior motives? Hidden agendas? Other ways to make money on this case? Who knows, now and later? Are you giving your investment as a convertible loan? On what criteria? Or simply buying equity? Do you get options? Do you want any money out in the short term? Are you rather seeking a consultancy contract? Do you expect to be paid – and if so: In what way, for what? Is this clear to all parties? Is the case the right one? You will always have other projects and causes to invest your time and resources into. Have you chosen this one for the correct reasons? What has influenced your choice?