MD at Founder Institute Germany | We help founders and intrapreneurs validate their ideas and build their dream startups | ASSIST Graduate
Objection, dear Johannis! While I agree on most of what you said and this aligns very much to what I expect from a valuable business angel, I disagree on the clearcut no with respect to sweat equity. While there are horror stories with respect to advisors taking enormous amounts of equity for the occasional call (we had such an offer when we started frents GmbH more than a decade ago, 8% for an advisory position) as well as stories about business angels taking disproportionate shares for small amounts (have seen quite a few offers where the investment/valuation relation would have killed the startup right away), I do believe in the value of advice even if it does not and can not come with money. We do take a small amount of virtual equity for running our Founder Institute Berlin / Germany program (no secret, 2,5% in the form of a warrant to buy shares) which belongs in small junks to everyone who contributed to the very cohort the founder was in (over 60 individual mentors and directors). From what I have heard in accelerator models, this is the most logical as the relationship does not end when the accelerator ends. It gives the founders a strong and incentivized network of mentors right from the start for a very small (and of course, I am biased, fair) amount of equity and someone to call when unfair players are knocking at the door. We do also recommend to our founders to build a small, but good advisor network from the get-go. With the same intention, having someone on your side to reach out to when in doubt / additional network is needed. With fair shares... There is even a public and free (US) template that details out possible equity / commitment couples available: https://fi.co/fast
😇 Not every angel is a good one.... 👿 As an angel investor, our role extends beyond mere capital infusion. It's about being a supportive partner in the entrepreneur's journey, offering valuable feedback and sharing our experiences to help navigate the often chaotic startup landscape. It's important to remember that we are not here to run the business or make decisions for the entrepreneur. Our expertise should empower founders to make informed choices, fostering an environment of growth and innovation. However, not every business angel embodies these principles. Beware of those who demand consulting fees or seek sweat equity as a precondition for their support. Genuine angel investors invest their resources and knowledge because they believe in the potential of the business and the vision of its founders, not for immediate personal gain. Choose your partners wisely. Surround yourself with those who truly want to see you succeed and are committed to providing genuine, no-strings-attached mentorship. What is your experience? My angel list of people I can 100% recommend: Tony E. Kula, Christian Reichert, Björn Jopen, Björn W. Schäfer, Stefan Menden, Süleyman Acar, Matthias Storch, Jan Dzulko, Jens Lapinski, Robin Haak, Georg Schwarzkopf, Manuel Bönisch, Laura Raggl #AngelInvesting #Startups #Entrepreneurship #Mentorship #BusinessGrowth #StartupFunding #InvestWisely
Ferdinand Mühlhäuser 🇺🇦🌍 - you should include my comments - otherwise it lacks context :)