I see a lot of discussions around this article on Facebook. Here is my take on whether or not founders of funded ventures should be angel investors.
In my personal opinion, I think this article needs to be more contextual. I feel a successful founder could be a great investor as he (or she… no gender bias, just for simplicity) would know what a startup founder goes through (professionally and personally) during the initial phase. The learnings that this investor could bring to the table would be beyond just money and network. Also, he has experience of raising capital.
As a startup founder, you are taking decisions every minute of your day. These decisions impact the business, its future, bank balance, personal life of the founder, his
career, the career of the people who are a part of the venture etc. and the investor could be a great mentor at this stage. Someone who has been a founder himself will understand the issues with empathy.
But, yes, it would be fair only if his own business that has been funded by an investor(s), has scaled to a level that he can afford take time out without adversely affecting his own business and investments in his core business. Such investor, before investing in other businesses in his personal capacity, would have definitely got the confidence of his own investors to be able to go out and do so. But yes, If a founder has not been able to build that confidence with his own investors, I am not sure if this founder could be the right investor for your business in the first place. I am sure founders of companies that have scaled and are successful would have developed a level of maturity to know and differentiate between their roles as a founder and as that of an investor and manage the expectations and their involvement accordingly.
In the silicon valley, the founders of funded & successful businesses invest in small startups because they don’t wish that a “cool” idea is stifled to death for lack of that “little” cash that the business requires or for the inability of its founder to raise initial capital for not knowing how to. Many cool ventures don’t know how to generate revenue in the initial phase, but they are awesome products / services. The point that I am trying to make is that a founder (based on my personal perception of them) is more likely to base his decision to invest on more possible outcomes that just of making multiples of X as ROI. Such founders want to do more, but they also understand that they cannot do everything, but would love to be a part of some cool stuff that could be impactful and change peoples lives.
The only negative that I can think about is that these angel investors who have been founders themselves, could end up micro-managing the startups they have invested in, more because of their hands-on approach in managing business.
As an entrepreneur, I know there is no right or wrong decision. A decision that results in a positive outcome is a right decision and the one that does not is a wrong decision. So while an angel investor who is a founder of a funded company may prove to be a great asset for a company, it may turn out to be a disaster for another. I would personally feel great if I have an angel investor like Deep Kalra or Vijay Shekhar Sharma 🙂
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