I had dinner with my good friend and Bazaarvoice co-founder, Brant Barton, on Tuesday at the new Sway in West Lake Hills (yummy) and we talked about lessons learned in angel investing. It was on my mind as I’m doing an AMA (Ask Me Anything) webinar with my good friend and often investing colleague, Josh Baer, on Tuesday, Feb. 5 from 4-5pm CT (you can sign up here). During my conversation with Brant, I distilled down to seven lessons learned (in the spirit of Lucky7, of course). Brant is reading Jason Calacanis’s book on angel investing and told me that many of these are in there (maybe all of these, I haven’t read the book), so you may want to turn to that to really dig in as I’m going to do my best to keep this post short. My hope in sharing these with you is that it ignites more angel investing in Austin - it is vital to our startup ecosystem here. We are doing better on that front in Austin than ever before, but I believe we are only scratching the surface here. And I hope these lessons have an impact beyond Austin angels and startups as well.
How to leverage advisors and investors as your extended team
As an entrepreneur, I fostered an unusual communication practice with our investors and advisors. I treated them as I would have wanted to be treated if I were in their shoes. This is the Golden Rule in action.
You need to have empathy for those that you raise money from. They aren't the "man in the arena" (one of my favorite quotes from Theodore Roosevelt), but they can be very supportive - should you choose to treat them as part of your extended team. They are putting their money (if they are angel investors) - or their investors' money (as is the case for venture capitalists) - into your venture and you should treat that capital as if it were your own. And if it were your own capital ask yourself, "What kind of updates would I want?" My guess is you would want to always know how the business is doing and how you could help the business - and therefore help your investment. Part of the thrill of investing is to see the entrepreneur succeed - both changing their life and many other people's lives in the process. Investors enjoy telling their friends - other investors and family - about the success of your business. The journey is more important than any return they get (although to be clear they don't want to lose either their money or their investors' money). The more they help you, the more they live vicariously through you - and their fingerprints are all over your business. This is called a "helper's high" by my good friend and CEO coach, Kirk Dando (you can read more about Kirk and the value of CEO coaches in my Lucky7 post about the 7 lessons learned on the journey from founder to CEO).