Unsolicited Angel Advice
A few lessons we have learned...
Craming Down Grandma: A Company Valuation Lesson
One of the biggest challenges with closing an angel deal is the valuation discussion with the entrepreneur.
In the mind of many angel investors, two components in the valuation equation are necessary in order to close an angel deal:
- The value of the deal has to be low enough to attract capital. (Angels writing checks)
- The value of the deal has to be high enough, so that the entrepreneur feels motivated to create value for the investors.
Stock Vesting – The Investors & Entrepreneurs Bestest Friend
Sometimes being a successful Angel investor is just chalked up to luck, because for every success there are a number of failures behind it. The same can be said for entrepreneurs, success and failures come by in many ways, some planned and some that just pop up out of nowhere. In both cases we have learned that failures are nearly always due to people and relationships.
So how do you protect yourself from failure? Due diligence and vesting of stock to founders, early hires and initial partners ensures that everyone’s interests are aligned with the goal of moving a company forward.
I will illustrate this in three stories that happened over the last year, but first, what is stock vesting?
Entrepreneurs: Beware of "Special" Advisors
A large part of the New Mexico Angels’ mission is to educate entrepreneurs and investors about raising and deploying capital. You see, it is in our best interests as investors to put money into companies that are well versed and educated on equity investments and the interesting issues that come about in seeking such.
Over the last few years, we have seen the rise of a new and interesting player in the start-up capital realm. The following is our opinion on this new development. As part of this article, we would also like to ask the advice, counsel, and experience of our email readers regarding the role of “special” advisors in angel investing, and particularly within the New Mexico Angels.
Angels: Beware of Some Entrepreneurs
In our line of work we see every type of entrepreneur there is, here’s a few we were able to profile.
Beware of Some Angel Investors
The profile of an Angel Investor can come in many forms, but not all are good. Although we’re Angel investors ourselves, we understand that relationships can break a company, so look out for these types of Angels.