The Angel Manifesto – Part 2
Principle 2: Provide specific actionable advice, but guide, don’t control.
Angel investors tend to be pretty successful people. They didn’t become an angel by taking a ‘back seat’ in life, instead, they often tend to be the person in charge. Being a useful angel, however, tends to require a different approach.
Again, our goal is to become angel investors who act as mentors. We have invested in a founder, ultimately, because we believe in him/her. They could pivot, the market could mutate, but the founder stays the same. If we choose them wisely, that should be the only big decision that we, the angel investor makes. We chose to back the founder and the team. Everything else that follows is mentorship.
Critically the advice we give should be both specific and actionable. I recently joined a great angel, Tariq Khan, during his portfolio review with a company we had mutually invested in. His approach was textbook. He started, in good tradition, by getting everyone settled with a cup of tea. He then checked in with the founder to see how he was feeling. The founder had a lot on his plate, in addition to running a growing business. Once he checked-in, he asked open-ended questions (Socratic method); these often started with the question “why?”. He then asked the founder how he could help. The angel listened, then offered very specific and actionable advice. Here is me paraphrasing their discussion around term sheets:
“I’ve heard what you have said and in my opinion, I think you should consider meeting with Tara as she is a leader in the field and is a close personal friend. She can talk you through the term sheets you have and help give you insight on the economics and control provisions that were proposed. I am happy to arrange for the three of us to meet in the next week. Give me three dates in the early evening and I will make it happen. With luck, she will be able to give us an insight on how to respond.”
My friend started by adopting Principle 1 of the Angel manifesto. He showed empathy. He realised that life as a founder is often a rocky path and he checked-in and offered to founder to lean on him. Once he checked in, he listened. He used open-ended questions and ultimately, gave specific and actionable advice. This resulted in a meeting with a subject matter expert who actually did help the founder, quickly, and for free.
The second part of this principle is guide, don’t control.
My children have recently reached the age where my wife and I introduced them the Star Wars (I think we were as excited as them!), Yoda’s technique while training a Jedi was to guide, never to control. He wanted his padawan to learn by doing, not by being told what to do. In times of emergency, Yoda often wouldn’t and the young Jedis’ would need to learn to fend for themselves. This is exactly the technique of a good mentor and hopefully a value-add angel investor.
Create a trusting environment. Be open, Be present. Share stories of how you may have encountered a similar situation in the past. But remember that you are not the CEO. You are, in many respects, now ‘working for the CEO’. If you can get this dynamic right you’ll be a better mentor and a better investor.
Managing Director, Techstars & UKBAA Angel of the Year 2018-19