Best Practices for Angel Investors
This article is written by Nardine B. M’barek, a Contributor Author at Startup Istanbul.
During Startup Istanbul 2017, we had the please of having among us Mrs. Vera Shokina, the Managing Director with Silicon Valley Bank’s Global Gateway group. Prior to joining Silicon Valley Bank, Mrs. Shokina was a Partner, CFO and COO of Runa Capital. When she joined Silicon Valley Bank, she remained 5 years as a banker, then became interested in the technology ecosystem, and decided to do that. During this workshop, Mrs. Shokina has talked to us concerning what a person who intends to become an Angel investor needs to do, and what are the best practices for Angel Investors in general
If you consider becoming an Angel Investor one day, or have the slightest interest in this field, then this article is definitely for you. Mrs. Vera Shokina, a Managing Director with Silicon Valley Bank’s Global Gateway group, was present during our annual event of Startup Istanbul 2017, and delivered an amazing workshop regarding how to become a successful Angel Investor, what are the things to consider before trying to become one, as well as the best practices for Angel Investors. In this article, the good practices for Angel Investors are going to be our main focus.
First of all, before investing in any company, you need to choose a field or industry in which you have little experience and understand well. Since you are going to need to discuss and hold meetings with the entrepreneur and company you are going to invest in, better know what to talk about and what to say when having these conversations.
Do not in any cases invest more than 5 to 10% of your net worth. Investments are not 100% successful, and if you invest much more than 10%, and the investment turns out to be a failure, then you are going to lose a lot of money, and you cannot afford that, it will possibly make you lose a little of your reputation as an investor, and impact your net worth, so you need to be careful. You cannot also take the fall if the company or the entrepreneur decides to let down the fund, that will impact you greatly.
It is okay to make mistakes and fail sometimes, nevertheless, you need to avoid these cases. In order to do so, you need to make sure that the company or entrepreneur you are going to invest in actually have the opportunity to make at least 20% profit, otherwise, it will not be a winning case for you.
Another important part of being an Angel Investor is dedicating time to mentoring and instructing your partners. That is why it is important to invest in a business that you understand, as they will probably need to discuss certain matters with you, ask you for some help concerning some issues, or ask you for little pieces of advice in order to make everything going well.
That is a primordial aspect of being an Angel, it is not only about writing a check worth millions of dollars, but also about giving your time to your investment, and making sure it turns out to be a success.
Avoid having too much control when you invest in a company and trying to be the boss of everything, you are the investor who advices and helps, not who controls everything. As we mentioned above, try not to invest in something you do not understand, to have long-term commitments with your clients, and not to spend much money on legal costs. If you think you can do all of these in the right way, then you are ready to go!