Today, I met a man who wants to be a business angel. He has made his money playing Internet poker and aims to retire as a business angel. He will fail.
Why are most business angels experienced entrepreneurs?
It’s easy for people to think that being a business angel is all about the money. I will argue that it is in fact everything but the money.
First of all, money is just money. Money has never done any work by itself. In wise hands, money can work for you. In foolish hands, it can work against you. A good business angel can tell from experience whether the entrepreneurial team can use the money or not.
Secondly, if the team has a great idea why would they need an angel? Let’s assume an idea is so simple that the entrepreneurs themselves understand what they are doing. Why would they exchange a part of that fortune for money?
In real world, only the people with bad to mediocre ideas contact the business angels in search of money. The business angel is an expert in spotting the best of the bunch.
Who is qualified to invest in your ideas?
I’ve said openly that I will be looking for a business angel to invest in my ideas and my team through the end of this project. But the dilemma is here:
- The ideas get constantly better when developed with people.
- Making the ideas happen doesn’t really need that much money when you already have the people who believe in them.
- The investors should have an increasing amount of knowledge to really contribute to the things we do.
But even so, the thought of getting a real business angel interested in what we do is fascinating.