More than just money: choosing the right angel investors

Understand if they're the hands-on or hands-off type

Hands-on investors

A hands-on investor is actively involved in the startup, offering strategic advice, mentorship, and leveraging their network to accelerate growth. They are deeply committed to the success of the startup and frequently interact with the founding team. Having a hands-on investor can provide several benefits, such as:

• Expertise and guidance: Their experience and industry knowledge can guide you through challenges and help you make informed decisions.
• Network access: Their network can provide valuable connections to potential customers, partners, and other investors.
• Accountability and mentorship: Their involvement holds you accountable and pushes you to reach your full potential.

However, hands-on investors come with a significant relationship investment, so you'll need to make sure there's a strong level of trust and respect there.

They can be your biggest champions or difficult to manage depending on how good of a fit they are with your strategic business needs and personality.

Hands-off investors

On the other hand, a hands-off investor takes a more passive approach, providing capital but not getting involved in the day-to-day operations of the startup. While they may not offer the same level of direct guidance, this investor profile has different advantages:

• Autonomy: With a hands-off investor, you have more freedom to execute your own strategies and make independent decisions.
• Flexibility: They understand that you know your business best and give you space to operate without interference.
• Focus on capital: This type of investor is primarily focused on providing financial support, allowing you to allocate resources as needed.

Hands-off investors can still be great champions and advocates for your business while also giving you the capital you need. The downside is that with their 'you know best' approach, you may not have access to as much strategic guidance when only bringing on hands-off investors.

It's essential to consider which investor profile aligns best with your needs, growth plans, and personal preferences. If you decide to bring investors onboard, you'll most likely have a mix of both hands-on and hands-off investors depending on your company's trajectory and specific needs. 

Due diligence goes both ways

Just as investors conduct due diligence on startups, entrepreneurs should also ask questions to evaluate if the angel investor is the right fit for their business.

Some areas you should consider:

• Alignment of vision and values: Look for an investor who shares your long-term vision and values. A shared passion and purpose can create a solid foundation for collaboration.
• Track record and expertise: Evaluate the investor's past investments and success stories. Are they experienced in your industry? Do they have a track record of supporting startups through various stages of growth?
• Network and connections: Consider the investor's network and how it can benefit your business. Are they well-connected in your industry or have access to potential customers, partners, or advisors?
• Availability and support: Gauge the investor's availability and willingness to provide support. Are they responsive and committed to being actively involved when needed?

Some questions to consider include:

• What is your investment thesis and focus areas?
• Can you provide references from past portfolio companies?
• How do you typically engage with your portfolio companies?
• What is your expected level of involvement?
• How do you measure success and support startups in achieving their goals?

Choosing the right angel investor is a critical decision that can significantly impact your startup's journey. While the financial aspect is important, it shouldn't be the sole focus. By matching with investors on Cherub, you can connect with strategic angels who believe in your potential, support your growth, and share your entrepreneurial vision.