Whether you are a new angel or one that has been investing for years, you are surrounded by such buzzwords as “passion”, “schedule”, “vision”, “exit strategy” and “term sheet”. It doesn’t really matter if you like the nuts and bolts of closing a deal, you like the thrill of the startup experience or you just like to see what you can do with your money.
The reasons you invest don’t matter nearly as much as the process. And, because it is your money, you are likely to be somewhat picky when it comes to the companies that you financially support through seed stage investing. Entrepreneurs are going to offer you all sorts of different opportunities in a wide variety of presentations. How do you measure one against the other?
Unless you can dictate exactly how every opportunity is presented – and yes, in certain circles you can – you need to be able to identify the most important aspect of the pitch: the vision. According to Steve Perlman at WebTV Networks and Moxi Digital, everything flows from the founder’s vision and if it isn’t strong or you can’t identify it among the fluff of the pitch, run the other way. [1]
Entrepreneurs are known as visionaries. They are typically bored of the standard run-of-the-mill life and have incredible instincts that combine with their expertise to create innovative ideas. Even when their friends and family tell them they are crazy and to take a nice, safe job, these individuals opt to go against the grain and at times risk everything. As an angel, it’s your job to help these individuals to fulfill their dreams. [2]
Amir Goldstein with AfterDox highlights that the first thing an entrepreneur has to be is a visionary. Vision is considered to be the foundation of entrepreneurship. He even goes so far as to write that the “notion that dreams do come true must reside in his or her heart.” But, he is also quick to add that vision is not enough. [3]
This is true in any investment deal, there has to be more than just a vision. While Goldstein suggests that entrepreneurs also have such qualities as technical, managerial, marketing, sales, financial and operational expertise, the reality is that if the entrepreneur has a vision and is able to surround him or herself with a stellar team that vision can come to fruition. [3]
As an angel investor, it is very likely that you too are a visionary; you understand the excitement and risk involved in launching a new company. You also understand that without vision, there is no direction. An entrepreneur that cannot communicate the vision, may not be in the right field of business. Sure, everyone wants to be their own boss, but do you want them to try it out with your money?
Look for the vision and what promise it can offer. Once that has been identified and you get excited about the possibilities, get into the nitty-gritty to see if the vision has the weight to weather the coming storm.
Notes:
[1] What’s most important: features, schedule or vision?
[2] To boldly go…
[3] Internet entrepreneurs should start with angels
* For series, references are published in the last installment of the series.
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