Business Angels to avoid!

There has been some good comments online about business angels to avoid – so it seems that the entrepreneur community is growing up and wise-ing up all at the same time.

As in all walks of life, there are the good, the bad and the ugly; but, for perhaps too long, entrepreneurs have assumed that a business angel was the answer to all their problems and hence, they’ve given the angels too much slack.

However, we are seeing a growing understanding that the solution to nearly all business problems is not money but a person who can solve them!

Okay, that sounds cryptic, what I mean is that the solution to a problem is found by looking for the person best placed to solve that problem – or team building! And, get the team right and the money will be a secondary issue – important, of course – but secondary.

For this reason, entrepreneurs who go dewy eyed at the sight of a cheque book are beginning to mature. Take this post by  Marty Zwilling which lists the 8 business angels you want to avoid – with particular criticism of the ‘broker angels’. This follows neatly on from our own piece on the fact that different business angels have different investment strategies that may or may not fit your business goals.

Equally, on this site, we’ve had Bill Morrow of AngelsDen explain how he deals with ‘business angels who try to sell ‘ – “we chuck them out on the night…” and those that aren’t really serious about investing get gently moved aside.

Still, there are too many business angels on LinkedIn who use the greatest excuse in the book ‘I’m not investing at the moment’ or ‘I’ve just had an investment go bad’ who then explain that they ‘know a few people’. This is the classic strategy of the broker in an angel’s cloak.

In a way, it is understandable, brokers need to do business and if entrepreneurs are not able or willing to ask intelligent questions, then they will carrying on masquerading as business angels as it is a quick way to generate leads.

So, it is worth remembering that brokers have an important role to play, it is just better to find out up front before spending to much time discussing your business.

So, what questions should an entrepreneur ask a potential business angel before getting too excited? We’ll cover that in our next article… 7 questions to ask any business angel.

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  • Aristos Peters
    Some really good points in this article. Consultants and vendors who wear the tag ‘investor’ or ‘angel’ but are really looking for work. The problem is that many companies do need help getting themselves “Investment Ready,” it just help when people take the approach of saying they are an investor to then turn around and say they are “not investing at the moment but I have a few colleagues who might be interested. Let me help you get investment ready (for a fee). Some of the angel networks are flooded with such consultants. We at Keiretsu London are looking at ways to make the ‘cash in the room’ more visible and accountable, as well as separating out sponsors or others who may not be investors. We are looking also to see if can keep a balance of around 85% investors and 15% non investors (sponsors & guests etc).
  • neil_lewis
    Thanks Aristos – agreed, it is all about transparency and balance.


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