In reading the section aptly named, supporting, in Winning Angels by David Amis and Howard Stevenson, I have come to understand yet another critical component of the 7 fundamentals of early stage investing. Supporting is just what you would deem it to be. Although the section delves into further aspects of support, at its foundation, it is how the angel investor will collaborate with the entrepreneur to ensure a successful venture. While some investors prefer to have more of a hands-on approach and assist with everything from early stage decisions to the hiring and subsequent firing of key positions, there are those who would rather supply the funds and simply sit back and wait on their return. Additionally, somewhere in the middle are the individuals who desire more of a coaching role to better facilitate the entrepreneur with the establishment and routine maintenance of the business. As Amis and Stevenson have noted, “angel investors follow participation roles that are a combination of the needs and wants of the entrepreneur, the company, and themselves.” After learning about the various functions that investors can play, I would rather have someone with more of a coaching responsibility to assist me in making decisions that can ultimately make or break the organization. Winning Angels notes, “the best two ways to figure out how to contribute are to ask the entrepreneur what they want and to do a lot of deals so you (the investor) know what they need.”

    

     Further along in the supporting section, an excerpt is taken from David Berkus’ book Better than Money, where he remarks, “experience alone is a powerful but very inefficient teacher. She tends to give the test first, then teach the lessons later…It usually takes more than one bad break to bring down a business.” If investors and entrepreneurs are continually monitoring the progress or lack thereof, they can make strategic assumptions that can be used to analyze the sustainability of the organization. Amis and Stevenson observe that investors should, “schedule a meeting each month with the entrepreneurs, usually for a half-day or so. At this meeting, all aspects of the company are examined, plans are re-assessed and modified, and opportunities to support the entrepreneur are identified.” With this transparency, the business is better equipped to outlive many of the initial hurdles and continue its quest for success.

    

     Despite the fact that entrepreneurs and investors alike will characteristically operate with the best intentions for the organization in mind, there is always the possibility of failure. Amis and Stevenson suggest, “entrepreneurs should handle their potential failure as they would any other potentiality in their business, that is professionally and with contingency plans. Handling failure right will maintain their reputations and many of the investor relationships.” With this methodology in mind, entrepreneurs can, “live to fight another day.” As David Berkus so eloquently puts it when he analogizes landing a plan to failing, essentially, he states, “the only thing to remember then is that any landing you can walk away from is a good landing, cause you’ll live to fly again tomorrow.”

 

Rest in Peace John Witherspoon

 

References
Amis, D., & Stevenson, H. H. (2001). Winning angels: The Seven Fundamentals of Early-Stage Investing.London: Financial Times Prentice Hall.

Berkus, D., & Kelley, B. (1994). Better than Money!: Resource Capital Concepts to Make Your Software Business Fly High! Santa Barbara, CA, CA: Synergy Communications Press.

K [Kyle]. (2012, May 18). Friday Gun Talk. https://www.youtube.com/watch?v=MFwz2ESjfBQ.

 

17 thoughts on “Supporting

  1. While the entrepreneur and angel will operate with the best intentions of the business in mind, sometimes that doesn’t always translate to what the strengths are of the individuals and the needs are of business. This is why the “team” is so important and the ability to bring on new individuals, employees and other investors, who can fill skills gaps.

  2. Tiffany,
    I agree with the notion of preferring to have an investor with more of a coaching responsibility to assist in making decisions that can ultimately make or break the business. Especially if this investor has their own venture or they are familiar with the entrepreneurial process. There is always the possibility of failure occurring. As such, it is imperative to trust those involved in the partnership to help find a solution and prevent failure form occurring again. This leads to professional growth for both the entrepreneur and the investor.
    Best,
    Shay

  3. Tiffany, If I were to have an angel investor fund my business, I would also call on their experience. Everyone has something to gain and I believe a team approach should be made. It would not feel right if the business failed and there were surprises on the side of the angel investors.
    Best regards,
    Mike Weimar

  4. Tiffany – this is an exceptional post. You have taken the major themes of the section and succinctly boiled them down to a bitesize portion of knowledge. Like you, I am a Berkus fan after reading “Winning Angels” and I love the excerpt you mention from his book. I also find experience to be an overrated asset in most situations but Berkus really articulates why: experience is often about learning from failure, which is a fate that most would like to avoid, if possible. It’s not that failure is inherently bad or something that a truly enterprising person can reasonably hope to escape entirely. In fact, if you haven’t failed, you probably aren’t trying hard enough. But it is, as Berkus says, an “inefficient” way to learn. As you mention, the combination of attention to detail and transparency within the organization can limit the number of mistakes and allow the business to “outlive many of the initial hurdles and continue its quest for success.”

    Great work!

  5. Tiffany,
    I loved the direct quotes you used throughout your post. Having support systems is important, yes, but you have to make sure you have the support system that you need. Living to fight another day is a great attitude to have but I think too often in failure people expect to jump right back into success the next day. With investing, time and time again failure and hardship will occur. Your post is a great reminder to embrace it and then build off of it when you are ready.

    • Thank you Colin. So, true…we certainly have to take the time to regroup and figure out our next move and the one after that before jump right back in! The key is to remember that we’ll have another chance, not to take the chance immediately!

  6. TK,

    You ALWAYS do an excellent job of recapping the reading and also capturing the spirit of the topics. I love the quotes that you include from the readings and sometimes quotes that may not have been from the reading, but are still very relevant to what is being said. I think you used the perfect word to describe the relationship between the entrepreneur and investor, as it pertains to support roles – collaboration. I just had a conversation with one of my bosses this evening. She doesn’t care how it gets done, she just wants it done. She will guide where necessary, but she does not breathe down our backs. For me, that’s where innovation kicks in. Others need more of a controlling environment, but even in a boss/employee relationship, the two questions an investor should ask an entrepreneur are great questions to ask your employees. What do you need and what do you want?

    Elaina

    • Thank you, Elaina! I’ve come to understand so much more about these relationships through the readings we’ve been assigned over the course of the program. I hope that in due time I will be a great employee, coworker, entrepreneur and eventually investor as well!

  7. Shannon Shepherd says:

    Tiffany,
    Handling failure is important to future success. I believe failure is all about perception. Its how you look at it. Failure in my opinion is just a stepping stone to success. It is not about how many times you get knocked down but the number of times you get up. Great post!
    Best,
    Shannon

  8. I believe that the investor/entrepreneur monthly meeting is a fantastic strategy! I really dig the idea of those contributors bringing their perspectives to the attention of the business owners. We all have unique ways of looking at things, and we have bias against seeing certain things. By fostering that diverse conversation about every aspect of the business venture, you should be able to gleam a lot more insight into where you can take the company.I have tried to do this as a manager with my direct reports, and likewise with my supervisor. Sometimes you get great inspiration, sometimes you get blank stares. But I think that presenting the opportunity of having the conversation opens up the possibility for growth.

    Also, John Witherspoon was wonderful in all of his roles.”Pop pop pop! Jiffy pop! Jiffy pop!”

    • Bahahahaha, I literally almost rolled off my bed laughing at your comment! Yes, John Witherspoon’s comical nature will be greatly missed 🙁 I certainly think you are on the right path. Communication is key; and, hopefully those blank stares will turn into aha moments!

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