This Thursday October 20, the Pipeline Fellows will announce their first angel investment in a triple-bottom line, women-led venture. As a Pipeline Fellow, I will “graduate” to becoming a Pipeline Angel. During the last six months I have learned so much thanks to the extraordinary hands-on, cohort learning format of the Pipeline Fellowship. Here are a few of the nuggets that I have collected so far:
Although millions of businesses are started every year, a small subset are appropriate for angel funds: typically businesses that are in high-growth sectors and commonly, have some underpinning of technology. The funnel narrows significantly when looking at venture capital, private equity and an eventual IPO.
Angel investing is not for the faint of heart. You can run all the numbers you want, but for seed or early stage companies, financial projections are just best guesses, not promises.Which means when you angel invest, you are betting on the founder(s), not the business plan, not the intellectual property, not even the break-through idea.
If due diligence is dating, then the investment is the marriage. Just like an ordinary marriage, an investment takes patience, patience, patience and work.
The angel investment model is the first step on the path to equity dilution for the founder(s). ……
You don’t need to have your company go public, or even secure angel investment, to be extraordinarily successful and impactful. Check out Amy Abrams’s and Adelaide Lancaster’s new book, The Big Enough Company: Creating a Business that Works for You.
I am disappointed that there are so few options for new businesses that aren’t on the IPO track but I am encouraged that technology and a return to common sense investing will change this.