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How Do Good Angel Investors Do It?

2010/10/20 15:30:00 60

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angel

The most important thing for investors to invest is to see people.

In addition to careful study of business plans, we need to understand all aspects of the team.

A trustworthy person, even if his business model changed later.

China has become a paradise for investment.

abroad

VC has poured in, and domestic VC has grown rapidly.

But behind the boom, a lot of start-ups who need the most capital support can't get the money.

At present, most of the VC active in China invest in mature and mature enterprises. It is very difficult for many early projects and start-ups to get VC investment. Angel Investor is looking for this area to be developed.

Angel investors are also known as investment Angels (Business Angel) angel investment.

Equity

A form of capital investment, which refers to individuals or institutions with certain net wealth, is an early and direct investment in start-ups with great potential for development.

The so-called angel investment is a concept. Any company or individual who is willing to invest in the main industry and invest can be called angel investors. They are more likely to participate in projects that are easy to participate in the early stage. Angels also dare to invest in big projects. However, they are generally unable to do so by the constraints of financial strength and personal ability or various factors, that is, what private equity capital PE does.

Angel investment in China has gradually gained media and social attention over the past few years, and they have invested a large number of well known enterprises.

At the same time, a group of entrepreneurs who have benefited from angel investment and venture capital have invested a large amount of money after their companies are listed or sold, and have invested in the venture business as an angel investor to support the start-ups and even Seed Businesses in their eyes. Shen Napeng, Deng Feng, Jiangnan Chun, Qian Yongqiang and Zhou Hongyi have emerged as representative investors with successful entrepreneurial experience.

But generally speaking, angel investment in China is still in its infancy.

The number of angel investment in the United States is tens of thousands, and the number of investment projects is 10 times that of venture capital.

According to the industry's conservative estimation, China's angel investors can only take hundreds of dollars, and investment cases and investment are even less.

Because of the uncertainty of environment and policy, the information asymmetry between entrepreneurs and investors, and even the communication with VC, the risk of angel investment can be increased and earnings can not be guaranteed.

Angel investors usually favor such projects:

A good entrepreneurial team has unique experience in industry and technology.

Innovative business models or products may still be in the Idea stage.

Entrepreneurial enterprises have already started to operate, and have already made some progress. Business models have also been verified by the market, such as website visits, product sales and so on.

The industry is not popular, and may not have attracted the attention of VC, but the potential space is very large.

The founders have already owned everything. Entrepreneurs should not work part-time in other companies or drive cars or live in big houses.

The demand for funds is not large. It may be between tens of thousands of Renminbi and millions of RMB.

When communicating with entrepreneurs, ask a few questions:

Are you willing to sell part of the ownership and control of the company?

Can you prove that the company will achieve substantial revenue and profit in the next 3-7 years?

Can you prove that the company will give investors a substantial return?

Even if you disagree with the investor's suggestion or the decision of the board, is it still acceptable?

Does your company have an exit plan in 3-7 years?

Matters needing attention

Cooperate with other angel investors.

In the United States, since the late 80s, there have been various kinds of angel investor clubs, such as Directory of Angel Investor Network, which specialize in collecting various kinds of clubs.

In this line, doing business alone is very dangerous. Many times, a person's investment may not even be able to find the reason why he failed.

Careful investigation of the team to be invested should fully understand the entrepreneurial team and conduct in-depth exchanges.

The most important thing to invest is to look at people.

In addition to careful study of business plans, we need to understand all aspects of the team.

A trustworthy person, even if his business model changed later.

IDGVC in all cases of investment in China, only the business model of the family is the same from beginning to end, and the rest have undergone various changes.

Angel investment is the same, business model can be improved, but people will not change.

The mentality of good service is to get high returns for high risk compensation, but at the same time, we should treat entrepreneurial enterprises in a service mindset to become their consultants and understand the predicament and goals of entrepreneurs.

To put forward their own proposals, they can bring more resources besides money, and help them grow by heart.

We should respect the entrepreneurs who respect investment as respected customers, and do not have the idea of the investor as the boss. That will only be bad for the development of the company.

Protect their rights and interests, and communicate with other well funded VC, so that enterprises will definitely need more foreign funds in the subsequent development process.

Therefore, angel investors should help entrepreneurs formulate overall financing plan for enterprises.

Because angels invest generally do not have enough funds to make further follow-up, they should pay attention to protecting their rights and interests at this time, and try to avoid dilution of their shares or reduce their rights in start-ups.