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There’s an old saying about angel investing: “Angels like to have a little fun, do a little good, and make a little money.”
Angel investing is more than just about money. I’ve found the successful investments covered all three of the elements of the old angel saying. It was fun. The people were great to work with. It had an element of making the world a better place albeit on a small scale. Finally, it provided a positive return on investment so I could continue funding startups.
Have a little fun
Pursue deals you like. If you don’t like the deal, then why spend the time? Ask yourself, do I want to work with these people? Do I value the work they are doing? If you can answer yes to these questions, you are well on the path to finding a deal that lets you ‘have a little fun.’
Do a little good
Once you have a deal you like, then ask, “does the company align with my interests?” Invest in startups that further that in which you believe. You may want to support your local entrepreneur ecosystem, or further a technology that can solve problems that benefit the general public.
Make a little money
Get agreement on the terms of the investment with a defined exit. Use the 3X in 3 redemption to define the exit.
If you can help the company then consider setting up an advisory position with them.
One of the biggest sources of burnout is uncompensated work. There’s an almost unlimited amount of work that needs to be done and the startup will load you up.
Set boundaries on what you are going to do and how you will be compensated. Consider including these negotiations in the term sheet, even if you don’t intend to provide advisory work as you may later be drawn into it. Having your time negotiated in the terms upfront makes it much easier to navigate the process.
Remember, successful investments let you make some money, have some fun, and do some good.
Hall T. Martin is the founder and CEO of the TEN Capital Network.TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: firstname.lastname@example.org