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The Invested Investor: The new rules for start-ups, scale-ups and angel investing
Do you see angel investing as much more than just putting up the money?
Are you willing to risk your money and work hard, even though you know the chances of success are slim?
Or are you looking for investors in your company who will provide real engagement and expertise as well as funds?
This book is for angels and entrepreneurs want to understand some of the potential pitfalls of angel investing and how to avoid them – or at least lessen their impact.
So if you want to help entrepreneurs build successful businesses, or if you are an entrepreneur who wants to build successful relationships with angel investors, read on.
Written by Peter Cowley with help from many angels and entrepreneurs, this book includes plenty of anecdotes about failures (and successes) and lessons learnt, the hard way.
Described as a readable reference book, it can be read in one sitting, yet contains guidelines and checklists to help angels and entrepreneurs on their journey from first meeting to eventual success or demise.
- GenresStartup
236 pages, Kindle Edition
Published October 1, 2018
6 people are currently reading
71 people want to read
About the author
Peter Cowley
5 books3 followersPeter Cowley was a British tech businessman, angel investor and speaker based in Cambridge, England. He was co-founder of VC Martlet Capital and was President of the European Business Angels Network (EBAN).
Cowley suffered from late stage cancer from late 2021, and helped other sufferers and their caregivers. His book about his experience of personal tragedy, terminal illness and business successes: Public Success Private Grief was published in April 2024. It was featured in The Times in January 2024.
Cowley suffered from late stage cancer from late 2021, and helped other sufferers and their caregivers. His book about his experience of personal tragedy, terminal illness and business successes: Public Success Private Grief was published in April 2024. It was featured in The Times in January 2024.
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Displaying 1 - 5 of 5 reviews
April 17, 2022
I’d call the title “Involved investor” - it’s only parts about money and mostly about You helping the new companies. An investor like that LOVES to help new companies grow big or exits. Yes the entrepreneur is running it, but it’s also a “baby” for the mentor/investor, being able to help and nurture the startup. One might even say it’s one of the greatest joy for them in life.
***
My notes from the book =>
* Entrepreneur is the one building the product in IT, and Business Angels are the one bringing the Business know-how part. So don’t think of Angels as investors, but rather Business Angels.
* If they have experience in another sector what the business is targeting, it’s no use. Has to be the same sector!
* Business Angels don’t only bring know-how and money, but also management skills, suppliers, client contact etc.
* The relationship should be transparent as friends
* For starting investors: crowd funding is not Angel investing, because You can not communicate strictly with owners or other important investors on business strategy etc.
* It is very important to have at least one good negotiator in the company
* Only such Angels should be accepted, that also have the money for second and third round - because it’s a bad omen for new investors, if old one’s don’t want a bigger slice of the pie.
* Don’t take on investors that put all their eggs into one basket (Yours). They become aggressive. Also if the investor was a CEO lately somewhere and quit, then he has too much time and might want to “help” to lead Your organization also.
* And don’t take on investors that ask for too much information and slow down on-boarding processes, because they will continue with this attitude for years and slow down Your growth processes also.
* Last but not least: take a GROUP of investors, not only one. You will get a much bigger network. 3-4 co-investors is good in the start.
* Love in First Sight is dangerous - this means your rationality is switched off and You are blinded, likely to make mistakes. Run!
* Pitching festivals are no good, for in a big group there is no chance to get meaningful communication.
* The author thinks the TEAM is most important. Investors invest in TEAM. So right of the start, talk about the team, their past successes and relationships.
* Author even says that the Team IS the pre-money valuation! Not the tech or infrastructure.
* Making a “decent profit” is not enough - this is a “lifestyle business” covering expenses. Aim much higher! Investors are not interested in dividends and small stable growth.
* It’s bad to have only one founding member, and more than 3 (overlapping know-how and too big expectations on exit profits to be shared).
* You have to live in the same region as investor, for many face to face meetings before investing.
* Me personally: I should talk about my previous SaaS-successes in grabbing a client for 10+ years.
* Author calculation: lifetime profits / lifetime costs (on-boarding, support) > 8-10x. Revenue is not important, profit is.
* You don’t have to own patents, but rather work in a field where other patents can not disturb/stop you.
* The author does not invest in APPS, but does invest in platforms. And pre-money valuation to be only 1-2 million max, this allows he’s growth 10x when valuation gets 10m.
* When talking and presenting, use images and graphs - but do not use them when SENDING information. Then use mostly words.
* At 1h22m he gives us the pitch deck format He likes to receive.
* Don’t sell, but be bought. A bidding war is the best possible option. A few large investors are better than many smaller ones.
* Business Angels each have a scope they are better in. The investor who is very valuable at 1M level is probably not as valuable at 10M valuation and even less so at 100M. Keep close the Business Angels that are perfect for your current level.
* VC money is like rocket fuel - you can NOT slow down once launched with it. VC-s aim only for the stars.
* CEO must be able to sell to everyone: VC/Angels, Clients, Employees. Can they take top talent form other companies? Can they push employees for more value, more input?
* At 2h43m is explaining the term sheet options in length. Re-listen when deals are close.
* Add a clause that if investor is not active in new rounds, they do not have the right to vote anymore.
* Also founders - when they leave, they should not keep rights or shares. Rather the board has to decide if they CAN do that, being the exception (and losing rights is the default).
* A lawyer must represent the company on deals. If the CEO does the paperwork, it simply is not taken seriously.
* The “Board observer” is an active role in arguments etc, but does not HAVE to be present. Members must.
* Author advice on board meetings: * Summarize the last * Actions arising * Sales report * Marketing report * Technology report * Human resources report * Finances report * Infrastructure * Risks * Strategy * Any other business. Send MANY things in advance if possible, days.
* To get ideas what questions to answer for investors: 3h19m
* Let shareholders know, how they can help! THAT'S WHY THEY INVESTED, to help You grow!
* Investors should rather be a mentor, not a coach. Share Your experience and teach.
* You can not complete on price if You want to scale your business.
* Say out loud that you plan an exit. Investors want that anyway. 8 years is okay. Don't try to fool them with 3 years.
* Repeating: You want your company to be bought, not sold. The deal as to come from outside (and ideally a bidding war), not You pushing it.
***
My notes from the book =>
* Entrepreneur is the one building the product in IT, and Business Angels are the one bringing the Business know-how part. So don’t think of Angels as investors, but rather Business Angels.
* If they have experience in another sector what the business is targeting, it’s no use. Has to be the same sector!
* Business Angels don’t only bring know-how and money, but also management skills, suppliers, client contact etc.
* The relationship should be transparent as friends
* For starting investors: crowd funding is not Angel investing, because You can not communicate strictly with owners or other important investors on business strategy etc.
* It is very important to have at least one good negotiator in the company
* Only such Angels should be accepted, that also have the money for second and third round - because it’s a bad omen for new investors, if old one’s don’t want a bigger slice of the pie.
* Don’t take on investors that put all their eggs into one basket (Yours). They become aggressive. Also if the investor was a CEO lately somewhere and quit, then he has too much time and might want to “help” to lead Your organization also.
* And don’t take on investors that ask for too much information and slow down on-boarding processes, because they will continue with this attitude for years and slow down Your growth processes also.
* Last but not least: take a GROUP of investors, not only one. You will get a much bigger network. 3-4 co-investors is good in the start.
* Love in First Sight is dangerous - this means your rationality is switched off and You are blinded, likely to make mistakes. Run!
* Pitching festivals are no good, for in a big group there is no chance to get meaningful communication.
* The author thinks the TEAM is most important. Investors invest in TEAM. So right of the start, talk about the team, their past successes and relationships.
* Author even says that the Team IS the pre-money valuation! Not the tech or infrastructure.
* Making a “decent profit” is not enough - this is a “lifestyle business” covering expenses. Aim much higher! Investors are not interested in dividends and small stable growth.
* It’s bad to have only one founding member, and more than 3 (overlapping know-how and too big expectations on exit profits to be shared).
* You have to live in the same region as investor, for many face to face meetings before investing.
* Me personally: I should talk about my previous SaaS-successes in grabbing a client for 10+ years.
* Author calculation: lifetime profits / lifetime costs (on-boarding, support) > 8-10x. Revenue is not important, profit is.
* You don’t have to own patents, but rather work in a field where other patents can not disturb/stop you.
* The author does not invest in APPS, but does invest in platforms. And pre-money valuation to be only 1-2 million max, this allows he’s growth 10x when valuation gets 10m.
* When talking and presenting, use images and graphs - but do not use them when SENDING information. Then use mostly words.
* At 1h22m he gives us the pitch deck format He likes to receive.
* Don’t sell, but be bought. A bidding war is the best possible option. A few large investors are better than many smaller ones.
* Business Angels each have a scope they are better in. The investor who is very valuable at 1M level is probably not as valuable at 10M valuation and even less so at 100M. Keep close the Business Angels that are perfect for your current level.
* VC money is like rocket fuel - you can NOT slow down once launched with it. VC-s aim only for the stars.
* CEO must be able to sell to everyone: VC/Angels, Clients, Employees. Can they take top talent form other companies? Can they push employees for more value, more input?
* At 2h43m is explaining the term sheet options in length. Re-listen when deals are close.
* Add a clause that if investor is not active in new rounds, they do not have the right to vote anymore.
* Also founders - when they leave, they should not keep rights or shares. Rather the board has to decide if they CAN do that, being the exception (and losing rights is the default).
* A lawyer must represent the company on deals. If the CEO does the paperwork, it simply is not taken seriously.
* The “Board observer” is an active role in arguments etc, but does not HAVE to be present. Members must.
* Author advice on board meetings: * Summarize the last * Actions arising * Sales report * Marketing report * Technology report * Human resources report * Finances report * Infrastructure * Risks * Strategy * Any other business. Send MANY things in advance if possible, days.
* To get ideas what questions to answer for investors: 3h19m
* Let shareholders know, how they can help! THAT'S WHY THEY INVESTED, to help You grow!
* Investors should rather be a mentor, not a coach. Share Your experience and teach.
* You can not complete on price if You want to scale your business.
* Say out loud that you plan an exit. Investors want that anyway. 8 years is okay. Don't try to fool them with 3 years.
* Repeating: You want your company to be bought, not sold. The deal as to come from outside (and ideally a bidding war), not You pushing it.
February 9, 2020
A readable and actionable book
This book is a delightful read, an honest sharing of hard-won experiences from a friend of startups. Every startup needs friends. He is critical friend, not a cheerleader, which is what makes these endeavours scalable and repeatable.
The book is particularly relevant for U.K. investors as it covers U.K. tax law but his advice about evaluating technology startups applies in every part of the world.
This book is a delightful read, an honest sharing of hard-won experiences from a friend of startups. Every startup needs friends. He is critical friend, not a cheerleader, which is what makes these endeavours scalable and repeatable.
The book is particularly relevant for U.K. investors as it covers U.K. tax law but his advice about evaluating technology startups applies in every part of the world.
February 17, 2020
Aside from providing a good practical blueprint for thinking about Angel investing, a very valuable resource for any entrepreneur that has, or will, raise early stage funds from individual investors.
January 10, 2021
Excellent book for anyone looking to launch Angel investor career or to raise Angel funding.
September 25, 2023
Practical advice, useful templates and a great starting point to identify areas to dig deeper.
Displaying 1 - 5 of 5 reviews