By Fred Crooks
Finding the “real deal” angel investor can be a hard proposition. In the past, there were three categories of investors that people joked about:
– Friends
– Family
– Fools
As time went by, the population has started to see good investments payoff and the idea of being an angel investor has blossomed. Now because EVERYONE wants to be an angel investor, we have moved further into the family, friends, and fools category. Many angel investors make their investment based on the “Get Rich Quick or Easily” premise. They lend money to new start-ups without understanding what they are really investing in, causing them to lose money and become dejected micromanagers who focus their extra energy getting in your way as you try to run the company.
So how do you determine if the person that wants to become an angel investor is the real deal and not just a cool subtitle? There are 750,000 so-called angel investors in America today and many, unfortunately, end up losing a large sum of money by making poor investments and being poor mentors. The goal of the angel investor is to become a mentor to the company and act as a check system to ensure the company is still growing and moving towards their ultimate goal. We recommend that your angel investor should ask the hard questions and not just sit back and let the company run itself, but don’t let them micromanage either! Too laid back or too aggressive can both negatively impact the outcome of a start-up company and make for a poor angel investor.
Lastly, we encourage you to really look at the angel investor you are partnering with and ask yourself if this is the kind of person you want “hanging around” your business and giving you insight into different areas. Are they really an entrepreneur or are they simply someone who just wants to make some money?
Would you want your angel investor to be more involved or less removed?