Six Key Motivations for Angel Investors #2
Welcome to the next installment of what I am coining….
The Six Key Motivations of Angel Investors (#2)
(Here’s a link to the first article)
Now during the first riveting installment I tackled the most common and probably the most predominant motivation of angel investors – the profit motive or the desire for a significant financial return. Now at this point, anyone who has had anything to do with angel investors have probably stopped and thought to themselves… “Well, isn’t that always the motive of an angel investor?” and I would argue that “Yes – it can often be the key motivator” but in my opinion it is not always the main motivation and often, even if it is, its blended with what I consider one or more of five of the other key motivations.
At about this point I would expect a big dose of “so-what?” to be sprinkled on this article…Again, I would argue with that “So-what?” and raise you with the point that if you understand the key motivations of your prospective angel or locked in angel then you have more chance of locking them in more solidly and getting more out of the relationship which will translate to driving your business to new heights.
Isn’t that what this is all about?
Here’s a ridiculous example to explain why this ‘”So-What?” is important – knowing someone is thirsty is critical when you are deciding if you’re going to pass them a drink of water or a sandwich…the more you can get inside the head of your angel investors and why they are angel investors and why they want to invest in your business – the better for you, your business and ultimately, your angel investor too…
One of the best Angel Investors I ever had was Professor Howard Stevenson – while driving through Princeton’s leafy backroads recently I had my radio tuned to NPR and was listening to Fresh Air or some such audio contribution to my ears and brain – I’m a sucker for public radio….what can I say – and after the show wrapped up, the radio broadcaster went into their ’sponsor’ regurgitation telling me and anyone else listening who’s dollars had made that particularly good show possible. In this case I almost swerved off the troad to hear that Howard Stevenson and his wife’s fund had paid for the radio show I’d just enjoyed. Now that was the second time I had enjoyed the output of something that Howard had contributed too…and the reason I say that is because Howard Stevenson was my first ever angel investor in my first real company.
Now having had Howard as an angel investor I can honestly say that financial return was NOT his main motivator…now could Howard drive a hard bargain – hell yes, of course he could, it was part of the game…but was that WHY he was investing?
Was that his key motivator? I would (hand on heart) say that in my opinion , Howard’s key motivation was to Contribute. He looked to back entrepreneurs because he wanted to help them create something amazing, because he believed in entrepreneurs, in having a passion for growing a business where nothing previously existed, in the dynamism of an economy based on the hard work of individuals coming together – Howard has given people the chance to positively change their lives through entrepreneurialism.
I can say, without any doubt in my mind, that Professor Howard Stevenson’s motivation was not financial return – no, in my mind his key motivation and the 2nd in this series of Angel Investor Key Motivations is “CONTRIBUTION”.
Why is this important?
Because if you are talking to an angel who’s key motivator is Contribution, you’ll have a very different conversation about very different subjects than those angel focused on financial returns. Learn to spot the difference and maybe I’ve helped by showing you there IS a difference.
Do you agree with me? Do you have any examples or stories of angels you’ve dealt with? Either positive or negative?
If you’d like more insights I’d love to give them to you – just join my email list on the right side of this page.
Here’s to your startup success!
Andrew
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