Angels, Know Your Team

“Looking for investor for new tech start-up – US$25,000.” This is a real headline pulled from a local advertisement on the web, and it identifies one entrepreneur’s search for an angel investor who can help turn her dream into reality. The balance of the ad describes the business in more detail: everything is ready to go, including location, name (brand), and intellectual property. The office will have a “neat theme” to create a unique experience for customers who want to drop by. Gosh, what more do you need to know?

Who’s Running This Show?

In a word, everything. This article in no way suggests that the above-referenced start-up is not a worthy investment opportunity. The thing is, you have no way of knowing at this point. The founder does invite interested angels to get in touch for more information. So pretend that you have done just that; what is the first thing you say to her? How about, “Let’s hear your pitch.” Then drill down to learn about her management team and their ability to launch successfully.

The management team is one of the most, if not the most, important components of any business: they’re the folks who should have the experience and know-how to keep the enterprise afloat. Who are the team members? What is each individual’s industry background?

101 Questions

When you‘ve dug into each executive’s background, you should be convinced that this group of individuals will be able to work together to make the business a success. Learn about them with these questions in mind:

• Does at least one person among the leadership group have demonstrated experience in the industry? Are they qualified?
• Does the team include the right mix of knowledge and skills to manage the company successfully? Are they capable?
• Do team members share a vision for the future of the business? Are they playing from the same page?

These entrepreneurial wizards are asking you to invest in their business; you are entitled to ask questions of them to reassure yourself that they know what they’re doing. Talk with members of the management team; ask them all of your hard questions and get more details about them and the business.

Always remember, this is your money we’re talking about, and you want to invest it wisely. Take a close look at these people. Confirm their competence and integrity. If they can’t give you acceptable answers, or if they choose not to reply, think twice about letting them use your angel wings.