Leadership Qualities Angel Investors Should Look for

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Last Updated: June 2, 2011

First Posted: February 18, 2009 by Matthew Brodsky

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Let’s be honest here from the outset about how I feel. I am the perfect entrepreneur for any angel investor. Yes, angel investors, if you’re out there in search of your next great startup to support, in search of your next great mad genius to give money to, I’m your man. Except that I am already taken. Sorry! But before you go cry yourself to sleep with unrequited love, let me at least share what makes me so great–I possess leadership qualities that you should look for in any entrepreneur.

I could start by rattling off a dozen or so personality traits that you should look for: creativity, ambition, confidence, energy, adaption, intelligence, competitiveness, risk-taking, optimism, dedication, motivation, etc. etc. And then I could call it a day and say, “Good luck in finding your entrepreneur.” But I’d be doing you a disservice. Those qualities are good, but they’re also too generic for your interests. Heck, you’d look for those same qualities in a coach for your little kid’s football team.

So for an entrepreneur suitable for your money, time and hard work, you need to search for a combination of those qualities that suits your tastes. For instance, an entrepreneur could be brilliant and driven, everything he touches turns to gold. But it turns out he is an entrepreneur merely because he craves the lifestyle of the rich and famous. I don’t know if I’d call him a leader…

Whereas another entrepreneur, hard-working, dedicated, smart, detail-oriented, could come to you with a track record of launching successful startups. He creates businesses for a living it seems, growing them until they go public or get sold off, then repeating the process. Leader? Could be your man.

Part of leadership is knowing what you’re doing, right? Or at least being able to convince someone you know what you’re doing. So when you meet a would-be entrepreneur, he might not have to have a track record as long as the Indy 500, but he should be prepared enough, and eloquent enough, to answer your key questions, like: who his major competitors will be, who will be his targeted customers, what’s his marketing strategy to reach them, how much angel capital will he need to succeed, how long will that money last, what will be your stake and role as angel investor, etc.

And you should sniff out the b.s. when listening to the entrepreneur’s answers. Did I forget to mention that your leader will have to be honest, able to handle and actually grow from your feedback and constructive criticism, and open to new ideas? For as much as your leader must believe in himself, he must also know his own downsides–and be open about those and willing to receive help to overcome them.

So, short of you getting a clone of me, you will have to find a leader who brings to the table the right combination of some of the traits we mentioned above. Or you could wait. Cloning technology is coming along, I head.

* For series, references are published in the last installment of the series.

Angel Investing, Picking Winners

tongyun

One of the greatest risks of being an investor is being able to find a terrific entrepreneur to work with and to be able to separate the “men from the boys”. This is where you have to do your due diligence so you don't end up lending money to the wrong person. Leadership is one of those qualities to look for because you want someone who will provide the strong guidance a start up company needs, especially during the formative years.
http://venturehype.com/ Venture Hype

We also like Colin Powell's 13 Rules of Leadership:

http://www.youtube.com/watch?v=C-vve55FDaU
uplana

There is a great need for a proper homework before selcting any entrepreneur for your money.The amount of money you invest depends on a number of factors like your risk taking capacity,age,resonsibility and income sources.There is always a hidden risk of lending money to the wrong person.So its better to avoid going with the market rumours and do a proper analysis and research about your enterpreneur
Cogbuddy

As rightly said, one must do the proper homework. Because i personally have the experience where i was let down once with my investment. I had to lose about 10% of my investment in just one month. Without knowing about the potential of that guy, i invested. But i had to blame myself for the loss. So am the perfect example for this post.
Descorpio

I am sure you must have learnt your lesson. Everybody gets the same punishment during the start up of their business. Whomso ever it may be. These are the stepping stones for your success. So take this and beware of such things. When ever you wanted to do any sort of business or investment, ask these 4 questions to yourself!!
What, Where, When, How.

If you can find the answers for all these questions, am sure you will get a big success in your business.
cirereyes

This is probably one of the reasons why there are a lot of businesses that fail. These Angel investors didn’t do their homework to check all of these critical things before going for it. It’s hard to look for quality entrepreneurs these days but I think these leadership skills could be developed but it will take a long time.
http://venturehype.com/ The Hyper Team @ Venture Hype

While some angels prefer convertible notes (lending money to a startup and converting the debt to stock when the startup raises capital at the next big financing round), others opt for preferred stock (stocks with extra rights). We’ll discuss each options and their respective pros and cons in an upcoming post.
http://venturehype.com/ The Hyper Team @ Venture Hype

There are no sure fire ways to predict whether an entrepreneur will thrive with his startup. But there are several common characteristics shared by successful founders. We’ll venture into this topic shortly. Meanwhile, don’t forget to trust your instinct. If you don’t even like or trust the entrepreneur in the first place, don’t waste your time — just pass on the opportunity and find someone else you're comfortable investing in. Remember, there's a chance that you'll be interacting with this entrepreneur for a good few years.
http://venturehype.com/ The Hyper Team @ Venture Hype

One of the safest ways is to invest alongside experienced angels and learn how they pick the winners. Once you get the hang of it, you’ll probably be able to spot one from afar.
Sanjay Uplana

It would be great idea to make a post regarding comparison about various investment plans like ulips and mutual funds. I also want to know about advantages, disadvantages and risk factor associated with long term and short term investment
Sanjay Uplana

I think the concept to share your buisness ideas and plans with your enterprenur is more important in the condition when someone is investing in a big deal. Although profit is our ultimate aim but there is not any harm to keep a track record of your investments. One should avoid himself from extreme interfernce in the work of a enterprenaur.
http://venturehype.com/ The Hyper Team @ Venture Hype

Angel investing is not the same as stock investing. You may want to read What is an Angel Investor: Do You Wear a Halo? to learn more.
Sanjay Uplana

I think a best entrepreneur is one who always offers a diverse range of solutions across his investors in any emergency condition. He just need to have conviction in what he do with a strong passion for excellence such that his investors have a full confidence in his innovative, stylish and reliable qualities.
mlgreen8753

That's great advice for angel investors. Do you have any recommendations for beginning stock investors? I'm researching a company called Mentor Capital that has a 20% claim in a privately held biotech company working on FDA approved clinical trials for a breast cancer treatment that exposes cancer cells and enables the immune system to fight the disease. Stock in Mentor Capital could pay off once the treatment hits the market, and even more so as they work towards extending the treatment to other forms of cancer. Aside from the product, the financial standing looks good, but I could use some additional feedback.
mlgreen8753

That’s great advice for angel investors. Do you have any recommendations for beginning stock investors? I’m researching a company called Mentor Capital that has a 20% claim in a privately held biotech company working on FDA approved clinical trials for a breast cancer treatment that exposes cancer cells and enables the immune system to fight the disease. Stock in Mentor Capital could pay off once the treatment hits the market, and even more so as they work towards extending the treatment to other forms of cancer. Aside from the product, the financial standing looks good, but I could use some additional feedback.