What is an Angel Investor & How To Hold Your Own Against One
Most commonly, an angel investor is an individual with a high net worth who often personally funds startups at early stages. It’s understood across the industry that these investments are very high risk, but rarely represent more than 10% of the angel investor’s portfolio. The rest of their portfolio is predominantly made up of more traditional investments with less risk. Meaning, they have other investments to fall back on should one risky investment fall through, but if that risky investment succeeds, the payoff is exponential.
Angel investors have quite the negative reputation in the entrepreneurial industry. They’re often thought to hold all the power because they hold all the money. They’re also thought to only care about profits, and are ultimately self-motivated. All of these assumptions may be true in some cases. Changing social influences have encouraged more compassion from angel investors, as well as an interest in a founder’s passion and commitment to the business.
Sadly, there’s still no shortage of horror stories from entrepreneurs regarding poor treatment from angel investors who ultimately see founders as tools for profit rather than human beings. The entrepreneurial industry has long told founders they must risk it all to find success. While some outliers may have found success in such a way, more often than not, these risks don’t pay off for the entrepreneur. However, angel investors may sometimes urge founders to take those risks, because again - the greater the risk, the greater the payoff for the investor.
But it’s important to remember that the risk isn’t always worth it for the entrepreneur, and if things turn out for the worse, the entrepreneur doesn’t have a whole portfolio of investments to fall back on like the angel investor does. Plus, not all angel investors are the most sophisticated or experienced startup investors either, so they often tend to give some bad advice and undue pressure because of their lack of understanding of the risks of building a high-growth company.
This kind of outside pressure from investors can be damaging to your psyche as a founder. It’s important to do your best to weed out angel investors with less than honorable motives during your investment round, but if you have already fallen prey to this kind of angel investor, you can learn to preserve your identity as both a founder and a human being, and stay true to the nature of your company’s mission and vision. However, it’s hard to do that when your emotions are all over the place and your fear of failure and disappointment takes the reins.
We understand this kind of emotional pressure, which is why we created an app that aims to help founders overcome it. With our mental health and performance grader, you can regularly assess your current mindstate and utilize our recommended tools to find calm and boost your performance. For instance, say you’re struggling with finding the confidence to confront your angel investor about their latest expectations regarding business operations. You can use our visualization tool to envision that confrontation and build confidence in your ability to handle the situation.
If you’ve had the misfortune of gaining investment from an angel investor who’s not aligned with your cause, it’s time to find your inner power as a founder. Take the necessary steps to improve your mindstate and learn to preserve your identity for the sake of your company and the reason you started it in the first place.
Start a seven-day free trial of the Founders First app and join over 3,000 entrepreneurs who have found success by prioritizing their mental health too.
Join the Community
Founders First is a set of evaluation tools that will improve your business by strengthening its most critical asset: You.
Are You An Entrepreneur Struggling with the Personal Impacts of Stress?
Let us show you a revolutionary program that’s transforming the lives of entrepreneurs just like you.
Join the Community
Founders First is a set of evaluation tools that will improve your business by strengthening its most critical asset: You.
Founders Forum is a live show where we talk about mental health in entrepreneurship and how to build resilience to stay stronger, happier, and be more successful.
