How do angel investors support founders after they have invested?

One of the surprising facts you might find when speaking to the members of the AIS community is that their motivation to become angel investors extends beyond making financial returns. Some angel investors enjoy engaging with their founders and providing business advice whilst others love angel investing because they get to work on some of the most challenging and pressing problems of the world. So what do angel investors do once they have invested and how do they spend their time on portfolio companies?

Figure 1. Type of experience business angels share with the businesses they invest in

According to a report published by the British Business Bank in 2020, the number one support angel investors provide founders is strategic advice, which is the case for 85% of angels. This is not a surprise since founders usually look for angel investors who have experience in their respective industries and can support the founder(s) during the decision-making.

The second most common manner angel investors support founders is by acting as a sounding board to the founder(s). Acting as a sounding board can come in many shapes and forms. Whether it is supporting the founder during a difficult decision or a product launch, lending a listening ear to the founder can be invaluable during those moments. 

Another essential way in which angel investors provide support to founders is by assisting them in securing additional funding. A primary reason for business failures often originates from startups running out of cash. The efforts made by angel investors to connect founders with other potential investors hold significant value to the founder.

Check out Figure 1 for further examples of how investors spend their time on portfolio companies.

Figure 2. Time spent per week on angel invested activities 

Based on the findings in Figure 1, to some becoming an angel investor might sound overwhelming. It sounds like angel investing can be quite the commitment if as an investor you need to provide strategic advice or act as a sounding board. Despite these findings, you shouldn’t feel concerned. Another survey from 2018 from the British Business Bank found that more than 70% of angel investors spend only a day or less than a day per week on their angel investing work as seen in Figure 2. So the likelihood of becoming overwhelmed as an investor is low and rather angle investing can be a fun opportunity for investors to be engaged in exciting and dynamic businesses. 

In conclusion, the role of an angel investor extends beyond providing capital to founders. There are many ways for angel investors to be useful to the founder. Some of the experiences angel investors share are strategic and operational advice, access to further investment rounds and acting as a sound board. 

Posted in

Leave a Comment