Welcome to this months round up of business angel news and ideas. We’ve got three pieces each of which has significant consequences…
We start this month’s business angel newsround we’ve got a fascinating report on angel investing strategies from China’s Lei Jun. He says…
“he invests only in markets and people that he’s familiar with. This might seem obvious — why would you invest in a person or business you don’t understand? — but Lei takes it to the next level, saying that once he’s chosen to invest in someone, he might follow them through multiple failed projects, so long as his faith in the person remains intact. “
Any entrepreneur who still thinks investors only care about the product or idea should take note.
Also, a highly significant event didn’t happen. As reported by Nic Brisbourne, Hulu’s sale fell through.
Why? Brisbourne says because far greater value lies in the content not the audience! That means startups hoping to build an advertising revenue model are likely to fail. It is original content (or brands) that count.
Does that kill half of all internet related business angel plans? I think so…
Our third favourite piece for the month says that freelancers make the best startup business partners.
Quoting from Luke Johnson, successful entrepreneur, venture capitalist and FT columnist, the article says that
“What often kills an early-stage business is excessive personal drawing of money by the owner, draining the company of vital working capital.
“If you moonlight [or we might add, freelance] the downsides are reduced. Even if it means 100-hour weeks, it’s likely that your employer’s salary will be the least demanding investment capital you’ll ever receive.”
Indeed. So, if you are asked to invest in a startup, find out if they founders already have an income from a job, part-time work or freelancing. If they do, then your angel investment will have greater flexibility around time-scales and be far less at risk of the founder needing to take money out or leave for a better income.