ENT 640 — Evaluating

The Importance of Evaluating

As I sat here watching the sunset, I completed the section on Evaluating in the book, Winning Angels.  I am sure that the sun has set on many successful deals because of poor evaluating or lack of trust in the Entrepreneur, the business model, the context or the structure of the deal.  As Entrepreneurs, we will be faced with making investments on opportunities that come our way.  I have actually taken a personal risk philosophy test and have determined that I am a medium risk taker.  

Like Winning Angels highlights, an investor has to be confident in the people you are dealing with.  The people include, not only the entrepreneur, but also the team members, other investors, advisors and stakeholders.  The section on sourcing also pointed out that it is important to have experienced entrepreneurs when contemplating an idea.  The entrepreneurs that winning angel investors  look for have knowledge of their industry, skills necessary to start a business, and goals for the company.  The one factor that this book mentions that really attracts investors is the existence of an exit strategy.  

One section that I found really interesting was the rejection section. As an investor, it is important to be timely with your decisions. Being of your word helps build your reputation as an investor. This reputation will win you more referrals. As an entrepreneur, you can learn from rejections. Many times you will obtain constructive criticism. Take the advice of the entrepreneur and use it to your advantage by improving your business model if necessary.

If I was evaluating myself as a potential investment, I would say that I am in the learning stage of my industry.  The regulations are up in the air at this present time. My company is in the beginning stage of an industry with a huge amount of competition.  As I look at the risk in the hemp industry, the return would need to be high to make this investment worthwhile.  

Amis, David, and Howard H. Stevenson. Winning Angels: the Seven Fundamentals of Early-Stage Investing. Financial Times Prentice Hall, 2001.

9 thoughts on “ENT 640 — Evaluating

  1. Hello Tina, It is important as entrepreneurs to understand what an investor is looking for in order to be ready for some tough questions. It seems like a great idea, market potential, and an awesome team are consistent qualities an angel investor might be looking for in a startup. Even though you are at the beginning stage, you have customers. Because of that, I think an investor would give your business consideration!
    Best regards,
    Mike Weimar

    Like

  2. Tina,

    I believe that no business or business owner should be discarded by investors. It may be that beginners like us turn into very profitable business ventures with a large market share in a short time frame. We’re in business because we have a mission and a vision, and want to achieve greatness. During the evaluation phase, if one investor turns us down, learn from it, move on, and try another one. As the author mentioned the entrepreneur is the one doing most of the work in this phase. We need to make sure it’s worth the time and effort 🙂

    Great review!

    Best regards,
    -Semir

    Liked by 1 person

    1. Semir,
      Thank you for the encouraging reply. I love hearing the success stories of entrepreneurs that do not give up. Not giving up on your vision is very important. Again, thank you for your comment.
      Tina

      Like

  3. Tina,
    I enjoyed reading your assessment of the evaluation section. One thing that I have not thought of until reading the book was how a rejection letter could cause an investor to gain more referrals. The point you bring up about being timely makes a lot of sense. I am a person that struggles with patience. If a person didn’t waste my time, I would look at them with more respect than those that would. This respect could easily cause me to refer a different business owner to talk with that investor.

    Liked by 1 person

  4. Dustin,
    Thank you for your response. I think it is important not to waste people’s time. I also think that respect goes a long way with a relationship between an entrepreneur and an investor.
    Tina

    Like

  5. I enjoyed reading your post on evaluating. The way that you incorporated the sunset into your post was an excellent touch. I agree that keeping promises and following through are essential not only for investors, but for entrepreneurs and anyone in general. The personal risk philosophy test is intriguing as I have not heard of this previously. I consider myself risk averse, and I am curious as to what my results would be. Great post!

    Liked by 1 person

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