Understanding the difference between roles
When you are an entrepreneur, your task can be anything and everything. From working countless hours on the front-lines, to running the show consistently behind the scenes – the work is never done and nothing is off limits. This should be contrasted by the support role that an investor takes. Instead of being involved in daily operations, the company will typically be better served by a supportive, coaching investor. Their task is to provide the entrepreneur with the resources needed to do their job effectively. Additionally, the investor can serve as a power for smoothing roadblocks that may be either impossible for the entrepreneur to solve, or else simply too time consuming.
Accomplishing “value events”
The authors of Winning Angels write in their book about the importance of something called a value event. These can be thought of as key-success milestones that happen during the lifespan of a business. For example, gaining a strategic partner, setting up effective advisory and executive boards, cash flow break-even, and countless others are all value events that the investor can play an instrumental role in executing. By focusing on larger, macro-events like these, a two fold benefit comes along. First (and quite obviously), these events impact the return on investment and general well-being of a business to a high degree. But second, when an investor is devoting their time and resources to larger events, the team beneath them will be freed of the chains of micromanagement. This will, in turn, result in boosted productivity and problem solving from your employees.
Finding your place within the culture
As we have examined, being a supportive investor in a company can be more difficult than it sounds. Act too little and you risk starving the company of precious resources you could easily provide. Yet act too much and your presence could become a burden if people begin to view you as a micromanager. The best investors will play on the strengths of themselves and the rest of the people involved in the venture. As such, it is wise to create a dialog with the entrepreneur early on about what kinds of daily impact he or she would like you to have. As George S. Patton once said, “Don’t tell people how to do things, tell them what to do and let them surprise you with their results.”
David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education.
Pozin, Ilya (2013). 20 Leadership Quotes To Make You Laugh. Forbes.com.