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Seed Capital From Angel Investors: Paul Olliver, Wider Wake Networks (Part 8)

Posted on Sunday, May 30th 2010

By guest authors Irina Patterson and Candice Arnold

Irina: So, what do you think is the most important thing that angel-backed founders should do to increase their chances of success?

Paul: From our perspective, if Wider Wake, being an angel group, has backed a team of founders, the best thing they can do is engage with those angels. Make sure that if you have angels or if you’re bringing angel money in, make surE it’s strategic money. I understand that some companies don’t have the choice, but where you do have strategic angels, make the most of them. I think you’d be surprised.

I know that Chris Cunningham at appssavvy – to use that example for all of these questions – he’s been surprised, encouraged, and enthusiastic, knowing that he has a team of angel investors on his camp table that can really help, and we have done. My help was very much in the early stages. He needed help putting financial projections together, putting a business plan together, and attracting other angel money. We also helped him raise his Series A in late 2008. And he’s very engaged with his angels, and he’s been pleasantly surprised at the level of reach that his investor group has. So, the single most important thing is engage them. Keep them in tune with your business, get them excited about your business because I think you’ll be surprised how much they can help.

Irina: And, what do you think angels need to do to increase their chances of success?

Paul: I’m gonna give you the same answer, but just turned around. Again, I think you’re talking to probably one of the most active groups in Wider Wake, in terms of precisely this question. We get very involved, and if we put in our own funds, we like to double those funds or de-risk that investment by getting very involved and I would recommend that, through our experience, that any other angel network would do the same thing. Again, it really depends, and, I think, the single most important thing we have pre-investment is only investing in companies where we can help. We see a ton of business models, a load of which show value, merit, and opportunity, but if we can’t help them – in other words, if we can’t provide any industry insights or any expertise that they may need – then that’s not the deal for us. And I think that should hold true to any angel. Unless you have the comfort of knowing you’re investing alongside other angels who could be strategic, then it’s not gonna be the deal for you.

So many times you see angel aroups who are less focused getting involved in businesses and industries where they don’t have any insights or experience and they can’t offer anything. And for me, that’s not the way I would like to invest. So, the single most important thing that angels can do is only invest in what they know and understand and they can help with. And then, second, post-investment, get involved. Help these guys out. Most of the time, you’re investing into entrepreneurs where it’s their first time. They need encouragement, they need empathy, but they also need discipline, they need responsibility. And a good angel, a good strategic angel, could provide that.

You know, occasionally there are such things as just bad business models, and where we see that, we’ll give our advice. We don’t want to knock anyone’s enthusiasm but we’ll be constructively critical about what they’ve presented to us. But occasionally – very occasionally – we’ll see good people with good business models, but it’s just not our thing. So, we try to send those . . . we try to build our database, and we’ve got a pretty good understanding of which angel groups, which venture capital companies, which private equity companies, you know, who’s going to want to look at what type of deal. And we very much don’t want to think of ourselves as a dead end. It would be nice to be able to increase that facility, to be able to send people in various directions. Because, again, we’ve all be on the other side of the table. We’ve all tried to raise money, and it’s not easy. And you do go round and round and the houses, and we wish that when we were growing up – when we had all the failed investment pitches – that they had at least sent us on to a couple more people so we could keep the momentum going. So, that’s very much something that we try and do.

Irina: Thank you, Paul. Fantastic insights.

This segment is part 8 in the series : Seed Capital From Angel Investors: Paul Olliver, Wider Wake Networks
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