Monday, September 19, 2011

What an angel investor expects from the entrepreneur

I am a strategic angel investor in four healthcare startups. I invest in these because I think there is a huge opportunity to fix a sick healthcare system in India today ; and that clever entrepreneurs who run startups are in the best position to be able to provide these solutions.
I'm happy to invest in these because I think I understand the pain points and can help them to focus on problems which are worth solving.

One of the reasons I invest is to make a return on my investment, but that's not the only reason. Entrepreneurs who take funds from angel investors must learn to understand what the investor wants and expects from them.

Since healthcare is my domain ( in which I think I have some expertise) , I also want to learn from the experiences of the entrepreneur. I would like to tap into their intelligence, and make good use of their complementary skill sets to learn more and profit from their knowledgebase. After all, the reason I am investing them is that I think they are smart and an learn from them !

Sadly, many entrepreneurs don't seem to realize the importance of communicating regularly with the angel investor. They seem to think of the investor purely as a source of funds - and will talk to me only when they want more money. It's not that I want to run the business or interfere with the day-to-day working - but I would like to know what progress they are making. I can learn from their successes – and their failures, as well. If nothing else, I will learn what doesn’t work, so I can become a better investor the next time around ! I can forgive failure, but I cannot accept silence.

Most of this is just applied common sense. Everyone is on the same side and wants the company to succeed. Entrepreneurs need to take a proactive role in sharing information and what they have learnt, so the investor feels that he's in the loop. An angel investor can provide guidance and a point of view - which may be wrong, but is still worth listening to !

This way, I hope to be able to create value beyond balance sheets, in the form of friendships - and most of all wisdom !
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