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Earlier this fall, Parker MacDonell, one of the most experienced angel investors in the Midwest, visited The Hub to share his insights and experiences as an angel investor. His session, Demystifying Angel Investing, pulled from the Angel Capital Association (ACA) and Parker’s unique experience as an investor, angel fund manager, and board director at ACA.
Among the many learnings attendees can take from the session, three stand out:
- Paying it forward
There are many reasons why angels invest, but for most of them, it’s not financial returns. Investing in startups is a way to give back – help and mentor a founder through the difficult startup process; create an impact in your community as companies get to market, add staff, and grow.
- Have an investment strategy
Most angel investors are not full-time investors, but you can still allocate your assets so you can diversify your personal portfolio. For many, this means taking 5-10% of your personal assets so as to not over-invest in these assets, but also to set aside enough capital so you can invest in at least 10 companies. Going further, investing in 20+ can significantly improve your chances of a positive overall return. Experience investors will also set aside funds to make follow-on investments to make additional investments in high-performing companies and retain ownership.
- Build an investment network
Because few angel investors are full-time experienced investment managers, they can often benefit from accessing support and best practices when it comes to deal screening, investment due diligence, deal negotiation, board governance, and more. Finding and networking with angel investor peers, participating in angel networks, and investing in angel funds can all be pathways to build this network.
Investing can be a rewarding endeavor in more ways than one, but it can also be daunting and may not be right for everyone. Make sure you’ve thought through what you want to accomplish, how you can help founders and startups (with money, time, and expertise), and how you can build out your personal investment strategy. Entrepreneurs’ Center manages the EC Angels network, a group of more than 50 individuals seeking to help entrepreneurs with guidance, connections, and capital.
Interested in learning more about investing or getting involved? Let us know.
