That was the theme a few days back at 2010 Angel Capital Association Summit in San Francisco and the title of the speech by angel investor and blogger Basil Peters, who asserted that VCs are essentially dinosaurs saddled with too-big funds at a time when entrepreneurs can create companies cheaply and quickly, sometimes over a weekend. What these start-ups need is a limited amount of outside capital provided by angel investors who know when to exit by selling to corporations hungry for dynamic young companies whose revenue they can scale from $10 million to $100 million or more.
Quoted from http://blogs.wsj.com/venturecapital/2010/05/07/friend-or-foe-angels-vcs-debate-who-has-the-upper-hand/
It is not an easy task to be an angel, many has lost a lot of money. But even worse, some never contributed at all. Saying that, there are also angels actually destroy companies by introducing scalable models to early ort demanding formal business case for all innovation case instead of coaching innovation and creativity.
Today, entrepreneurs can set up a new business very quickly, acting big, with all support system and infrastructure in place in just a few days. Being a business angel is not about bringing money to the table, that what´s the VC should do. It is about helping entrepreneurs focusing, prioritizing, and thinking long term without losing the operational perspective. Simple go for excellence, with limited resources but with a great idea and a lot of engagement and drive. Being an business angel and entrepreneur, I have my own check list (Penker Venture Zone) of what I believe and what learned is key success factors for supporting and helping entrepreneurs driving up their businesses;
- Pick case where the chemistry is working
- Build a common exit route with the entrepreneurs
- Be active but not operational, run frequently board meetings secure a short term plan (3 month), and a 3-5 year long term plan
- Challenge the Sweet spot – What business are you really in, why do your customer buy from you
- Challenge for commitment, individual and common. Go for breakthrough thinking, coach on results and failures. I always run what I call “The commitment day” with all my new companies, a hard day and night work ending up in a rocket solid commitment for an inspiring goal.
- Coaching in-between the board meetings, preferable the CEO. Typical prioritizing, focus areas, problem solving, aligning the organization
- Enhance the management team by supporting, challenging and encouraging building for the future leadership
- Secure constantly improvement of delivery capacity, competence management, talent management, innovation management
- Understand the company culture, challenge and drive debate about it. Facilitate! Visualize!
- Have fun.