The Most Prominent Characteristics of Angel Investors
Angel investors come as the light in the darkness and provide much-needed support for startups on their very early stage. Without them, a large percentage of world-shattering products and services that we use today would not have existed. This article sets out to explore the characteristics of angel investors. We have included some encouraging quotes from renowned angel investors to inspire you through the way.
Creations have their early roots in imagination and innovation, but for this tiny seed of potential to grow, there is the need for further support. Innovative startups need money to develop their ideas; however, the support they need goes beyond mere funding. The budding startups are in dire need of encouragement, feedback, guidance, advice, and making new connections.
Who Are Angel Investors?
Angel investors are seasoned professionals with an extensive background in business, management, finance, etc. They provide funding for startups when no one believes in them and take prominent risks for reasons that go beyond making more money. Angel investors are experienced individuals with an eye for talent, willing to impart wisdom to the new generation of innovators, and to mentor them to success. What are the most notable characteristics of angel investors that set them apart from venture capitalists?
They Welcome Risk
To invest in an early-stage startup takes a lot of courage and a tendency for adventure. Risk-taking is one of the central characteristics of angel investors. Although the assessment of the startup’s idea is crucial before commitment, investors know that it takes much more than a good idea to make the startup a success. An angel investor goes all in despite the uncertainties surrounding the outcome.
“As an investor, I cannot tell that. We cannot predict the success or failure.” – Ron Conway
They Are Observant
Investing is an art. It takes powerful observing and judgment skills. Finding out what is “hot” is one thing, but exploring the possibilities of the future takes real expertise.
Being observant and attentive are sought out characteristics of angel investors. They are in constant search for the next big thing and are on the lookout for potential entrepreneurs who are on the right track.
“I have no idea what’s hot. But I’m certainly always listening. Big Dumbo ears. Just listening.” – Doug Leone
They Are Critical Thinkers
Investing is a calculated endeavor. Because of that, critical thinking is among the characteristics of angel investors who have made great success in their careers. They do not fall in love with illogic business ideas based on emotions and friendship.
Focused critical thinking should not be devoid of emotions. When in doubt, adding a pinch of imagination goes a long way.
“Only when you combine sound intellect with emotional discipline do you get rational behavior.” – Warren Buffet
They Have An Eye For Talent
Focusing on the potential abilities instead of the actual state of a startup is one of the defining characteristics of angel investors. These angels look at a tiny seed and realize what it can grow to become and judge it based on its future. Recognizing this hidden quality is what makes angel investors excel at what they do.
“The more angels we have in Silicon Valley, the better. We are funding innovation. We are funding the next Facebook, Google, and Twitter.” – Ron Conway
They Are Natural Coaches
Angel investors are not mere financiers. They are involved with multiple aspects of the startups, including the human factor. For startups to grow, the people behind it should grow as well, and that is the job of a mentor.
The ability to provide support and building confidence is among the most significant characteristic of angel investors.
Angel investors are natural coaches and great mentors that guide the cofounders through the tiring path that leads to success.
“Mentors, by far, are the most important aspects of businesses.” – Daymond John
Angel investors do not put all their eggs in one basket. After all, there is a certain amount of risk inherent to angel investing. Due to this fact, angel investors are careful in diversifying their bets.
“Startups fail more than they succeed. A lot more, in fact. Experts haven’t settled on an exact number, but studies peg startup fail rates anywhere from 75% to as high as 90%. To combat these risks, professionals hedge their bets by diversifying their investments across multiple companies. When someone goes out and becomes a professional angel, they’re allocating a certain percentage of their net worth to go out and make 10, 15, 20 different bets. They have a large enough pool that hopefully, they’ll find some winners in there. Investors can also minimize their financial risk by teaming up on investments with friends or colleagues.” – Kevin Rose
They Are Connected
Angel investors maintain an extensive network of connections. These people have earned respect and trust of some key partners throughout the years, and they can leverage these connections for the prosperity of the startups they support. By introducing the startup to the right people and putting their name behind the startup, they bestow upon it an unmatched sense of credibility that would have taken years to achieve.
“You’re looking for somebody to put in the effort. I’m not a bank. I’m not here to do transactions. I’m here to build relationships.” – David Tisch
They Are Experienced
Due to their extensive background in management
and business, angel investors have a lot to offer the beginner lever startups. They provide this valuable experience to ensure the success of a startup.
Angel investors usually play a consolatory role for startups as well. They impart wisdom on strategy, operations, management, pitching, finance, and much more.
They Are Patient
Patience is one of the most critical characteristics of angel investors. There are multiple elements to ensure the possibility of a faster growth; nevertheless, it still takes a lot of time for a seed to grow into a tall tree.
Angel investors understand the anatomy of learning curves and reaction latencies.
Patience and continuous support enable startups to live up to their potential and become what they can be.
“The world is full of foolish gamblers and they will not do as well as the patient investors.” – Charlie Munger
They Love What They Do
It takes a certain love of angel investing in creating success. Angel investing tests your endurance in the face of hardship. Giving continuous support after numerous mistakes and shortcomings on the part of the startup is not the easiest thing to do. A love for enabling the next generation of success is one of the most outstanding characteristics of angel investors.
“I invest because I love helping entrepreneurs and watching them learn and succeed. In my opinion, your motives are driven by self-serving factors around ego satisfaction and ‘making a buck’. My motives and values are very different.” – Ron Conway