Angel Involvement After Closing The Deal

It is extremely important angel investors and entrepreneurs agree with each others’
business goals and perspeives before a deal is financed. However, the relationship
between the entrepreneur and angel investor does not end when the deal closes. After
the closing of the deal, it is vital there be a positive, open, and honest relationship
between both parties throughout the span of the company’s development. The
following are some eeations angels have and options to consider after the closing.

Systematic reporting process
This system refers to the investor reporting package which keeps an angel
informed about the company in a timely ner. The entrepreneur is eeed to send
a quarterly letter to all investors regarding the company’s perforce as
well as a monthly basis conta with lead investors concerning the organization.
This systematic method makes the entrepreneur more account and proaive in
responding to early signs of problems within the company. In addition, when angel
investors are more informed of the company’s perforce, they are more likely
to participate in future rounds of company funding.

Alternatives for company failure
The high risk investments angel investors are known to make can sometimes not be
as successful as the initial prediion. In an event a company fails, angel investors
may have to resort to some alternative s to prevent company downfall. Due
to the fa that angels hold a minority position within a company, they are responsible
for convincing the founding shareholders to agree with any of these alternatives.

Proteion of documentation/agreements
The primary reason for an angel investor’s proteion is be the
perceived value/significance of any outsider’s contribution to a business
endeavor, whether the funding comes from an investor, seice provider, etc., inevitably
declines over time. When a company becomes successful sometime during its development,
the entrepreneur will most likely attribute the company’s success more to
his/her efforts put in and all the wise decisions that s/he has made, rather than
to the investors’ funding, mentoring/advise, and contas the investor has
provided to make the business a success. Any verbal promises or oral understandings
initially made need to be conveyed into paper form through attorneys. These
documents should refle the needs and concerns of both parties during the
venture.

Levels of involvement/participation
y angels play an aive role in their portfolio companies. There are different
levels of angel participation in a company. Most angels prefer roles b and c.

Patience for success
Most angel investors were once entrepreneurs themselves and have eerience in the
industry of their investment. They truly a great deal of personal satisfaion
when they witness their portfolio companies flourish and succeed. Due to the fa
they often provide early-stage funding, they are aware it takes time to witness
any progress and profitability in their investment. One of the s
angels possess is a tremendous amount of patience, which is charaeristic to their
success as investors.

The eeations between the angel investors and entrepreneurs must be clearly articulated
prior to the closing of the deal, with documentation to verify any agreements
made. To maintain a positive relationship with angel investors, it is the entrepreneur’s
duty to provide their investors with quarterly reporting as well as timely
company progress and/or problems. On the other hand, it is the angels’ responsibility
to aively seek alternatives if a company is on the brink of failure. Being aware
of all of these issues and aive engagement by both parties will allow the entrepreneur
and their angel investors to establish honest, solid relationships throughout the
course of their venture.

Source