December 20, 2012
Traits of a True Angel

Angel investors are an important source of capital for early stage
startups. Without them, many startups would never get beyond the idea
phase. However, not all angels are equal. There are many individual
investors, but certain traits separate the average investor from the
true angel.

A true angel not only enables a startup with fuel in the form of
dollars invested, but also has the ability to make game
changing contributions during startups critical early stages. Those
contributions may be advice and mentorship, customer connections, and/or
bringing other high quality investors into orbit around the startup.
Founders should search for the angels that can augment their strengths,
shore up their weaknesses and help them get whatever they most need to

Here are some additional qualities that set the best angels apart
from the pack. The more of these qualities an angel has, the more
desirable, from an entrepreneur’s perspective, they are to have on your
extended team:

They invest in people not companies
From my
experience, the most successful angels and those that are the most fun
to work with, invest in you and your team, not your company. The first
angel who shared this investment philosophy with me over a decade ago
was Eric Silverman

They are in the game for more than the money
if you want to make money, it is important that your investors care
about the money they are investing, and that they want to make money. If
they don’t make money, you don’t make money. However, they aren’t in it
FOR the money. They are playing the angel game because they are
addicted to it. They love working with startups and entrepreneurs, and
their primary goal is to make you successful and have fun doing it. An
angel whom I met recently who appears to hold this as a cornerstone of
his investment philosophy is Semyon Dukach.

They have a strong network or expertise that they can use to help you grow your business
best angels bring far more than money to the table. They use their
resources, connections, and skills to contribute to your company’s
success in game-changing ways.

They are individual decision makers
They may rely
upon a few key confidants or domain experts, but generally speaking,
the best angels have cultivated an ability to understand a company and
do the research to make their own decisions. The Providence-based angel,
Angus Davis, is a great example of an angel who acts clearly and decisively in his investment activities.

They make decisions informed by the present, and they do it quickly
angels don’t wait for more information. They take the information
available at the present time, and they give you their decision. There
is nothing more frustrating during the fundraising process than an
investor who options the future by either not saying no quickly or not
clearly communicating what they need to see before they will invest. The
best angels are clear and transparent on this front. Bill Warner, a Boston-based supporter of entrepreneurs everywhere, exhibits this quality consistently.

They have been an entrepreneur and started a business like yours
best investor in your early-stage startup is someone who understands
the path that you are walking. If you are starting a high-growth tech
startup, then investors who have founded high-growth startups are going
to understand the challenges you will face better than those who have
not. They will viscerally understand the highs and lows that come from
growing an unproven business, and they will be able to provide valuable
advice during both the ups and the downs.

They understand that there are multiple paths to success
might have taken VC or angel funding, or perhaps bootstrapped a
business, but they understand that no two startups have the same needs.
They can apply their unique experience to your unique experience without
needing to project their experience onto yours. Jean Hammond is an experienced angel that thinks creatively on this front.

They respect your time
the best angels understand the demanding nature of a startup and that
your primary goal is to build your product and prove the market, they
don’t treat their time as more important than yours.

What traits have your best angels had? Please share them in the comments of this post.

Owen Johnson is a co-founder and managing partner of Betaspring.  You can find this post, as well as other content on the Betaspring blog located here.  You can also follow Allan on Twitter (@owenjohnson) by clicking here.