The Making of an Angel Investor

The beginning…..

At the beginning of every journey you ask yourself, why am I doing this?

Is it for fun?

Will it be interesting, or allow you to learn?

Perhaps the journey will help people?

Is the reason a good one, or is it something else, like ego or greed?

So for me, Angel Investing helps me to fulfil a deep-seated need to strive for a better future. This might sound naïve and even a little grandiose, but to me, it’s just a mindset to help me work towards, and spend my time on actions and projects that I think will make a positive impact on the world.

And angel investing allows me to work where my strengths are really helpful, in critical thinking, problem-solving, understanding people and trends, and financial planning and analysis.

In saying this, I am well aware that Angel Investing is ultimately a financial and investment pursuit. And having spent most of my career in finance and investment roles, I take the financial planning, investment decision making and risk management aspects of Angel Investing very seriously .

And of course, I also very much hope to bag a unicorn and bring more opportunity into my life – why wouldn’t I!?

I am writing this series of blogs to help build awareness and skills in the community! Hope you like it.‍

My Angel Investor journey

I’m very fortunate to be part of the Airtree Explorer program where I will learn from the best at Airtree and the 30 participants what the best practices are. Prior to this I’ve done very minimal angel investing, but have experience investing in many asset classes during my career.

Here are some of my initial goals on this adventure:

• Raise awareness of angel investing
• Learn about founder needs
• Learn about what the Gold Coast and Qld startup space need to prosper
• Help angels in my network to invest well and get in on the best deals we can
• Create an angel group of friends initially to invest with – as I don’t have enough funds to make these investments alone
• Get my first angel investment done in Q1 2021
• Complete 10 – 20 investments in 2021 / 2022
• Ensure the portfolio returns are above the benchmark on a risk-adjusted return basis
• Bag a unicorn 🦄‍

What is my value as an Angel?

Angel Investors can provide value to companies in varying ways.

For example, some may purely just provide a cash injection to a start-up, and remain a silent name on a growing cap table. Others may provide more value in the mentoring and guidance they provide, rather than the funds they’ve injected. I already learnt from the explorer program that it can be a great idea to have a few companies that you’re active with, and the rest are passive.

In my role as CEO at Cake I have gained some incredible experience to bring into the Angel Investing world.

For example:

• At Cake, we work with over 400 founders already, and many investors from angels to VC
• Unfortunately raising capital is an incredibly hard, costly, confusing and excessively time-consuming process for founders – I understand this and can help to find solutions
• I present around 3 – 4 times per month to founders on how to raise early-stage capital, and regularly mentor founders
• I’ve witnessed a distinct lack of ease of communication between founders and investors
• I recognise the need to raise awareness and create systematisation, standardisation and scalability to promote a greater number and value of early-stage deals being done‍‍

What should I know?

So what do I think I need to know to be a great Angel Investor, or at least to get started and learn to become one? Here are some of the things I will learn about and share in this blog series.

• What is angel investing? Let’s not reinvent the wheel here, check this out.
• Who are the best angels and how can I learn from them? Again – this has been done so well HERE. 😀 Thanks John Henderson at Airtree.
• What is it about the companies that get the best angels to invest?
• What do the best angels avoid?
• How many holdings should I have in my portfolio?
• What are some examples of the most common exits?
• How do we deal with valuation at Pre-seed and Seed?
• What deal analysis / DD process should I follow?
• Are there any deal breakers that I won’t invest in?
• What does it mean to be a wholesale/professional investor?
• How do I get the best founders to let me invest?
• What entity structure should I use?
• Are there any tax / government incentives that I can access?
• What do I expect from my founders in terms of reporting and compliance?
• How do I track my portfolio performance?

This is not an exhaustive list, and I know some of these answers already (or at least I think I do). But in the interest of avoiding my biases, I will learn as much as I can.

This blog is designed and intended to provide general information in summary form on general topics. The material may not apply to all jurisdictions. The contents do not constitute legal, financial or tax advice. The contents is not intended to be a substitute for such advice and should not be relied upon as such. If you would like to chat with a lawyer, please get in touch and we can introduce you to one of our very friendly legal partners.