“10 Golden Rules of Angel Investing” What rules might a “higher inves ting pow er” pass on to angel inves tors, to help in t heir ques t for success in early s tage compan y inves ting? Alt hough not necessarily etched in s tone, w e’ll take a s tab at w hat might be considered t he “10 Rules of Angel Inves ting”: a set of basic rules for early s tage compan y inves ting. http://cosmosgroup.ae
1. “Profit is the Ultimate Goal.”
Angel investing is not charity.
Invest to create successful companies.
Invest
The goal is to yield profits for future investments.
Create
Grow
Exit (M&A or IPO).
2. “Invest in Great Teams.”
Avoid single member “mad scientist” investment.
Great entrepreneurs build great teams.
Great teams can overcome most challenges.
Try to find, and fund, great teams (business experience, business diversity, attitude).
3. “Invest in Big Ideas.”
Look for big idea, where market is heading.
Avoid the “me too” investment (similar ideas in crowded field).
But: big idea must be backed up with data.
4. “Invest in Large Markets.”
Large markets allow for growing pains; “larger field”, more “playing time”.
Large markets support inevitable competition.
Even “somewhat successful” result might yield “large exit” in a large market.
5. “Know The Valuation Range.”
Angel investing is risky investing, don’t overvalue.
Companies should be reasonably priced.
Use “comps” of similar companies but always adjust for risk.
Remember: failure more likely than success, don’t be afraid to walk away, there will always be another deal.
6. “Always Do Due Diligence.”
Angel investing is full of “unknown unknowns”.
Use your due diligence time to uncover them.
Take nothing for granted, be thorough.
7. “Support Your Companies.”
Keep “dry powder” for future investment rounds.
Listen and advise where you add value.
Help “keep the faith”: start-ups succeed with persistence and patience.
8. “Create an Investment Portfolio.”
If one or two out of ten or twenty are “homeruns”, you need a portfolio of co.’s to increase odds.
Invest where comfortable but diversify.
Be patient: a good investment portfolio takes time to develop.
9. “Know When to Fold ‘Em.”
Don’t throw good money after bad in deals.
Don’t just chase the “homeruns” (100X exits).
Reasonable returns in a reasonable timeframe (doubles, triples etc. keep you “in the game”).
10. “Give More Than You Receive.”
Always be teaching, as well as learning.
Mentor and help entrepreneurs and startups, even those you may pass on, for investment.
Those you help, may later help you one day.
I. “Profit is the ultimate goal
II. “Invest in great teams.”
III. “Invest in big ideas.”
IV. “Invest in large markets.”
V. “Know the valuation range.”
C O S M O S GROUP
VI. “Always do due diligence.”
VII. “Support your companies.”
VIII.
“Create an investment portfolio.”
IX. “Know when to fold „em.”
X. “Give more than you receive.”
Who are the “COSMOS GROUP” Cosmosgroup.ae is an angel investment company which provides comprehensive support to the budding community of start-ups and entrepreneurs in the Middle East region. Our team of experienced internet entrepreneurs have partnered and counseled several web start-ups in the region. We respect the spirit of entrepreneurs and start-up community. And it is disappointing to hear about a potential start-up not able to scale up due to lack of funds. When we provide financial backing for such startups or entrepreneurs, we invest in the person rather than the firm’s viability. This helps us focus on helping the business succeed under any circumstances.
C
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S
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http://cosmosgroup.ae