ENT 640 Week 7 Blog: Supporting – by Mary Schuler

Image result for Supporting business stick

As I understand at this stage, when it comes to a deal with an entrepreneur, it is now that I will own a part of the company as an Angel Investor. Understand that this is the startup business, a “baby” of the entrepreneur and you are supporting, helping maintain and see it grow. This is just the beginning because the deal is not done yet till you see the real return of profit and the actual profitable exit. As investing your own money to the company, you should already have experience and knowledge to understand the entrepreneur’s situation. At least believe in his/her vision, business strategies and to make your own decision to participate or not participate in any role to support the business.

Firstly, identify the reasons of supporting behind your decision: is it all about the money or you are just a type of person who wants to help a starter business to succeed eventually. You know there are risks and challenges but because you would like to put your knowledge, experience, and networking in use to help others and expect a return.

Secondly, identify the potential value events are the process of opportunities such as getting to know the business as well as the entrepreneur; the profitable margin that being tested; the quality and value of business that can attract more investors in the next round etc.,

The value events need to be identified and applied in different contexts depending on the type of business in which you are investing:

Is it a product business or a service business? Is it a retail business or an e-business? Are they just a single type or the combinations of two or more?

  • Product business: making or selling a product
  • Service business: provide a service
  • Retails business: selling someone else’s products to the public
  • E-business: Using internet to create business

There are five fundamental participation roles for the angels, according to the author Amis, D. and Stevenson, H. Winning Angels: The 7 Fundamentals of Early Stage Investing. Pearson Education Limited, 2001. The important thing is to think about what is the best way for you to contribute, to make the different, and most importantly is to get your money out. You have options to just doing nothing or need to provide helpful resources and specialist knowledge depending on business scenarios:

  1. Silent investor: pure financing invests, sit back and hope for a return
  2. Reserve force: ready, willing, and capable to help when needed and when seeing opportunity arises.
  3. Team member (full or part time): get actively involve on a project or in a functional area.
  4. Coach: provide support, advice, and any assistance as needed and requested by the entrepreneur.
  5. Controlling Investor: taking control and manage the company.

As a supportive investor, you offer strategic advice and input in key decisions for the company by providing knowledge and fostering business connections. Help establish networking connections with other group of investors and promote new investors to do business. Assist with the investment process. Offer continued support through the initial set-up and beyond to leverage the growth opportunities. However, you want to see if the entrepreneur has the passion, the commitment to achieve the goal.

 

Resources: 

Amis, D. and Stevenson, H. Winning Angels: The 7 Fundamentals of Early Stage Investing. Pearson Education Limited, 2001.

https://en.wikipedia.org/w/index.php?search=product&title=Special:Search&profile=default&fulltext=1&searchToken=cf24wej3hrba8eingasjoyqou

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7 thoughts on “ENT 640 Week 7 Blog: Supporting – by Mary Schuler

  1. When looking for an investment, the entrepreneur must first understand what the investor is going to contribute to the startup. From the five roles of an investor, as listed in “Winning Angels”, I feel if and when I start a business I will be looking for someone who could either be a reserve force or a coach.

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  2. Mary,

    Your post covered the subject very well. This chapter in particular was of interest to me, since I’ve always counted myself as a very hands-on person. For that reason, I would like to think that I would be very involved in the day to day activities (or at least strategic activities) of a business if I ever invested in something. Becoming an activist investor is probably my ultimate business dream.

    Nicely done!

    Austin

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  3. Mary, you did a very good job with your write up. As a entrepreneur I would want my investor to be an active participant in my business. The experience and knowledge I feel would be crucial for the companies success. As a angel investor if I am putting my money in again I would want to be active with the entrepreneur keeping an eye on how things are progressing.

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  4. Mary,
    I would like my investor to be the combination of a team member and a coach. I like the idea of another set of eyes that share the same vision about “my baby” yet may have a better idea on how to manage/grow/fund etc. Their strengths could help with my weaknesses. While researching supporting, I found an interesting article I think you might like. I think the book they mention could be used somewhere in this program.
    http://www.billgeorge.org/articles/huffington-post-youre-only-as-good-as-who-you-surround-yourself-with/
    Cece

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  5. Mary,
    Awesome job on the blog post. I agree an Angel investor needs to decide early on what role of support they will operate in. I could not imagine not having an active role in my investment even if I am only serving as a coach. I genuinely love to see other’s dream come true, being able to see a business grow from infancy to maturity and make a profit would be my dream come true.

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  6. Mary,
    Great Post – I am a hands – on and visual person. I love to observe and listen to how others became successful ; but, I am also a person who enjoys telling me what I do know in hopes of helping others to reach their dreams. Likewise, this chapter really makes me evaluates my needs and what’s best for my business.
    Thanks for sharing!

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  7. Hi Mary,

    You provided a nice recap of the section on structuring. As an entrepreneur, I have always preferred an investor who was willing to serve as a “coach” or active mentor in the process. Sometimes it is important to have a clear, experienced head off which to bounce problems and ideas. What do you think your preferred type of support might be?

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