In the early days of Indochino.com, just the idea of someone investing in my business partner and I’s company was amazing! I got lucky and stumbled into some awesome angels. In retrospect, here are a few things I would look out for when finding angels for a future startup:
Look for Advisors and Friends First
We used Indochino as a legitimate excuse to talk to any quality businessperson we could think of. We did not talk about money at all. Through these informal meetings we were able to see the types of people our potential angels were, how they take and gave feedback, and how much work they were actually willing to put in. By the time it came to ask for money, the process was relatively easy; we had already established a trusting working relationship.
Applicable Business Experience
Bringing on partners with industry experience may mean a lower valuation, but it generally worth it. The angels we chose (or chose us) had all built companies from nothing to very large businesses in similar industries. Being first-time founders, our angles helped us navigate each step of our growth to date, and continue to help us avoid costly mistakes. As one angel shared with me: ‘You will make a lot of small, medium, and even large mistakes. We are here to ensure you do not make any fatal ones.’
I was surprised to discover that starting and growing a business is largely a personal battle: Managing work and social life (or lack thereof), staying healthy, keeping a good state of mind, etc.. I found that as the business developed, support and feedback from my friends was less than ideal, the life of a startup entrepreneur is odd and unique at the best of times. Having an angel who has been in similar situations and is willing to share insights on this level can be a lifesaver.
Similar Long Term Vision
Two years after starting the business, we (the founders) see a myriad of opportunities to pursue. Our investors have and always will be choosing a certain growth path. There is merit in their focused approach and it would of been good if we had talked and thought this out a bit more back in the early days.
Large Net Worth
Our experience has been that having an angel that can comfortably loose the money they give us is best. They seem to give more space to run your business and will also give more objective, less bias feedback. As you grow, they can be a source for additional funding too.