Sourcing – Winning Angels

Winning Angels: the seven fundamentals of early-stage investing

Winning Angels: the seven fundamentals of early-stage investing

In this section of Winning Angels, Sourcing, the book describes how an Angel (an investor within the Angles Investment Group) can find prospect ventures. The main takeaway from this section is to get your name out there as a person that can make an impact through investing. One of the first ways a person can be the go-to guy is to meet with traditional lenders; by meeting with lenders you will be an option as a lender for ventures that are underdeveloped for traditional sources. Another way to get your name out there is to work with other Angels and invest in opportunities with them. There are many ways to be successful in finding ventures.

One step that an investor should consider is what kind of venture they feel comfortable investing. A suggestion is to stick to ventures that they are familiar with. Once the Angel has settled on the type of ventures he or she is looking for, the angel needs to look at as many proposals as possible. Since not every venture proposal will suit every investor, the more proposals read will lead to more possible attractive proposals.

While reading the Sourcing section of Winning Angels, I was understanding what an investor is looking for in an investment. As the person who will be the investment at some point, I wanted to figure out how this information would help me. I want to take a moment to compare the information from investors to investments.

Getting your name out there is important.

Serial investors have a track record of knowing the risks of starting a venture. Even if you are not a serial investor being known in the community as a reliable person helps to establish character.

Sticking to investors or investment of what you know.

An investor that specializes in medical businesses may not know if a retail business is a winning investment and should stick to the sector that they feel comfortable. Moreover, a person who wants to open a retail business should seek out an investor that knows retail and does not specialize in medical. There are many cases where an investor linked up with a business that could have succeeded but the two parties did not work well together, and the venture failed.

The more proposals lead to more winning possibilities.

An investor needs to look at many proposals to find ventures that will lead to success. The same can be said of the investment. Until a suitable match has been made, the investment party might need to make many proposals to investors. The key to both sides is that they don’t give up or settle for the first proposal if the deal doesn’t work. 

As I was thinking about the networking of the landing an investment, I thought of the ABC television show Shark Tank. The American business reality show features a panel of investors from different business sectors, and potential investments are brought in to pitch their idea, business plan, needed capital, and terms. In the episodes there are deals struck as well as denied. Not every deal that is struck turns out to be a winner, and some of the ventures fail. The ventures that have done the best have been between an investor and investment that were suited for each other. Interesting enough is that there are plenty of ventures that were denied that have gone on to succeed. These results only prove that the best chance of success is to be matched with the right investor and not to give up after being told no.


Sources –

Amis, D., & Stevenson, H. H. (2001). Winning angels: the seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.

ABC Entertainment. (2020). About Shark Tank TV Show Series. ABC. Retrieved from https://abc.com/shows/shark-tank/about-the-show.


One thought on “Sourcing – Winning Angels

  1. Hi Dustin,

    Nice work! I enjoyed reading your blog, but particularly liked how you had a great example of sourcing in “Shark Tank.” I quite enjoy this show and specifically how the investors have the power and oftentimes, “know-how” as you mentioned to help the entrepreneurs succeed in making their dreams reality. When I was reading through the chapter, I was solely looking at sourcing from the investor’s point of view; but, sourcing from the entrepreneur’s aspect is vitally important as well. When those sharks make deals, it is generally because they understand the industry and have contacts that can make the deal successful. Likewise, when the entrepreneurs have multiple sharks interested in their venture they typically choose the ones that will be more advantageous to them and their organization. Thanks for the analogy, it really opened my eyes up more!

    Best,

    TK

    Like

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