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07/22/2013

Book Review: What Every Angel Investor Wants You to Know


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Angel-Investors

The term "angel investors" originally was used for wealthy individuals who financed Broadway plays. Today it describes those who finance business startups. With the growth of entrepreneur activity in New York, it has gained new prominence for both those involved and startups, and for those who may help finance them. Most angel investors don't make any money. Most business startups fail. Many business startups have no informed idea on how to get funding. Angel investors can provide the initial capital before the business is ready to seek venture capital funding, making What Every Angel Investor Wants You to Know: An Insider Reveals How to Get Smart Funding for Your Billion Dollar Idea a significant asset. The book, by New York Angels Chairman Brian Cohen, is a systematic step-by-step guide with "Takeaways " at the end of each chapter and real-life examples—which are essential.

For those seeking funding, the book offers a description of "The Perfect Elevator Pitch," and questions the angel investors want answered in this pitch. It's a two-way street, hopefully the start of a business, and a relationship with the investors. Most angels "want to have a successful relationship with the founder." It's more than the business plan and the numbers. "Leadership Chemistry" is key. Cohen goes on to outline the "10 Practices of Highly Effective Entrepreneurs," which include the ability to make lots of decisions and constantly challenge assumptions. Entrepreneurs who approach angel investors should keep in mind that they are talking to people who may have listened to hundreds of startup presentations, and already invested in an array of businesses. Their chances of success will be greatly increased by reading this book, and using it as a guide.

Angel investors also offer more than money. Many are successful business operators and executives. They can offer access to their networks of potentially helpful connections, mentoring, and advice. Since many startups come from those with limited business and financial experience, this mentoring can help bring the startup along to the next steps. Angel investors can be "Outside Eyes and Ears," proving an objective view to those who are often intensely focused on their business vision.

In the entrepreneur financing world, there are recent trends to new formats. These include Incubators, Accelerators, and Crowdfunding. Crowdfunding is becoming increasingly popular, but as this book points out, it doesn't include mentoring, and results in a large group of investors. This large group may be hard to manage, and may create problems if the next step is seeking Venture Capital money. Those looking to do startups need to become sophisticated on how to get funding, as well as all the business demands from our fast moving, ever more competitive, rapidly changing world.

The dream of founding and investing in the startup of the next Google is deep and widespread. While the odds are small, it will happen. What Every Angel Investor Wants You To Know is a great value in helping the reader realize this dream.

–Bill Hayes

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