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.