What are the best practices when working with an angel investor?

Anyone with a capital surplus can invest in angels, but if you don't offer value to the companies you invest in, you'll be known as “dumb money”. Being a passive angel works for some people, but for the ecosystem to work more effectively, you should offer support to your founders. Starting to help founders even before investing is a good practice for building a positive reputation. At the same time, make sure you're providing the right level of support and that you're not too practical or annoying.

With this in mind, the first step is to establish a regular cadence of meetings and synchronizations in which you can choose the brain of your angel investor. You and the investor should set a schedule, but in general, weekly calls are a good idea initially. Then, as you develop a better relationship with them and they understand your business, you may want to reduce the frequency of calls to once a month. If you have a rare angel investor who doesn't want to fill a seat on the board of directors, it may be worth mentioning this topic to him so that he can continue to provide him with the experience he needs outside of board meetings.

Angel investors provide guidance, mentoring and essential connections during the early stages of the business. Your angel investor has a wealth of knowledge that you can use to learn, grow and make better decisions as an entrepreneur. In fact, one of the aspects of the business that your angel investor can show you is the “soft skills” needed to succeed. Of course, entrepreneurs won't need this guide right away, but what you can start with is working with an angel investor to understand the metrics that would make your business attractive to venture capital firms.

Even if you're stating the obvious, discovering big companies is absolutely critical to your success as an angel investor. In this way, you will not only benefit from the experience of your angel investor, but also the knowledge of all your network connections. A particular type of networking opportunity that angel investors could offer to aspiring entrepreneurs is the ability to connect with other entrepreneurs who have been successful and can share their learning. For example, let's say that your angel investor tells you that the way he managed a staff change was “suboptimal”.

Your angel investor could introduce you to some venture capital investors who are likely to be interested in your product. The time you dedicate to your angel investor will undoubtedly be crucial to the success of your organization. It is very likely that the angel investor you work with has invested in companies that have already raised capital in the venture capital round. Given enough time, your product finally gained enough traction that you could create a sizzling vibe and attract an angel investor to invest some money in your idea.