Humanising Angel Investing

I don’t characterise myself as a skilled investor. Far from it. I’m still very much developing out an investment thesis. I do, however, believe that there is value in humanising our interactions with founders when making angel investments, and I’m keen to share my thoughts on this.

When assessing a pre-seed/ seed investment opportunity, the first question I tend to ask a founder(s) is how they are doing. Are they happy? Are they stressed? Are they up for the challenge? How they have been up to this point? The founder IS the investment at this point, so I’ve always thought it was common sense to ask how they are getting on. Without a founder and their desire to achieve their mission, what future value does any investment have?

I know the founder will take on a huge amount of stress growing their business, often for little reward or compensation. I also know that their wellbeing, particularly mental wellbeing, is fundamental to the success of their business. Therefore, asking how the founder how they are doing seems like an obvious place to start when assessing an investment opportunity in a young company.

Asking someone outright how they are doing can also be an incredibly disarming question and one that brings the discussion down to a personal and relatable level. Again, if I’m investing in a founder then I think a personal connection is important, and this seems to be a great question to start building empathy and engagement with.

I’ve found that starting with the founder’s wellbeing leads to further questions that help to build an insight into a founder’s personal values. It helps me understand how they treat people, how they view themselves, and how resilient they are. If they engage me in a reasoned way, with honesty and humility, I find they are more likely to engage staff, suppliers, customers, and investors, in a way that is reasoned and level headed, which I feel is necessary for leading a high growth business.

The other question I like to ask of the founder is how they deal with conflict. I know that they will be facing huge pressures to make such a business work and that conflict is inevitable. If they can demonstrate that they can resolve a conflict properly, then it’s a good indicator that they can work out how to build a high growth business.

In the end, this all helps me build a picture of how a founder might go about building their business. I then use this picture to evaluate the likelihood of success and the potential financial returns. This is far more valuable to me than knowing what a founder thinks their series B round might look like in 10 year’s time when I’m looking to invest.

Again, I don’t interact with enough investors to know if this is standard thinking, or if I’m well off the mark. So far, this approach seems to be working for me, but in reality, only time will tell. I get the sense from the founders I’ve worked with that many investors may not take this approach, and therefore maybe this is an area for improvement.

I’m keen to hear the opinions of both founders and investors. Is founder wellbeing a priority for angel and seed investors? If yes, why? If not, why not? Is conflict resolution an indicator for future financial success in a company? I’m curious about people’s thoughts.

I feel that these types of discussions all help us improve and the feedback and discussion will no doubt be insightful for us all.

About the author — Aidan Kenealy

www.aidankenealy.com

My mission is to help those with high growth businesses realise their vision for success. I draw from the unique lessons learned growing EMGN to help founders and CEOs get the best out of what their businesses can be.

If you would like to discuss how I can help you and your business — please reach out via LinkedIn or email aidan@hiov.co.nz

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