It is extremely important angel investors and entrepreneurs agree with each others’
business goals and perspectives 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 expectations 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 manner. The entrepreneur is expected to send
a quarterly letter to all investors regarding the company’s performance as
well as a monthly basis contact with lead investors concerning the organization.
This systematic method makes the entrepreneur more accountable and proactive in
responding to early signs of problems within the company. In addition, when angel
investors are more informed of the company’s performance, 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 prediction. In an event a company fails, angel investors
may have to resort to some alternative solutions to prevent company downfall. Due
to the fact that angels hold a minority position within a company, they are responsible
for convincing the founding shareholders to agree with any of these alternatives.

Protection of legal documentation/agreements
The primary reason for an angel investor’s legal protection is because the
perceived value/significance of any outsider’s contribution to a business
endeavor, whether the funding comes from an investor, service 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 contacts the investor has
provided to make the business a success. Any verbal promises or oral understandings
initially made need to be conveyed into legal paper form through attorneys. These
legal documents should reflect the needs and concerns of both parties during the

Levels of involvement/participation
Many angels play an active 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 experience in the
industry of their investment. They truly feel a great deal of personal satisfaction
when they witness their portfolio companies flourish and succeed. Due to the fact
they often provide early-stage funding, they are aware it takes time to witness
any financial progress and profitability in their investment. One of the assets
angels possess is a tremendous amount of patience, which is characteristic to their
success as investors.

The expectations between the angel investors and entrepreneurs must be clearly articulated
prior to the closing of the deal, with legal 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 financial reporting as well as timely
company progress and/or problems. On the other hand, it is the angels’ responsibility
to actively seek alternatives if a company is on the brink of failure. Being aware
of all of these issues and active engagement by both parties will allow the entrepreneur
and their angel investors to establish honest, solid relationships throughout the
course of their venture.