5280 Angel

Isn’t this the BIG question on everyone’s mind? It must be because I get asked the question often enough I decided to post my answer. What do I want in a business? Fair enough. Here’s the short answer in a long sentence: I want an intelligent, no-holds-barred team working to build an exciting business that makes me smile because it benefits society or improves mankind or revolutionizes an industry, and it just happens to have the potential to throw off a disgusting amount of cash along the way. (breath)

Other than that, I look at each deal through two lenses, the investment lens and the business lens. If I don’t like the picture through either one of these lenses, I move to the next deal. It isn’t too complicated nor is it a perfect science.

The business lens shows me the team, the problem being solved, the product, the market size, the technology, the financials, the competition, the demand, the barriers to entry…etc. I try my best to evaluate these areas to determine if this business truly has legs or is just an expensive education for the founders.

The investment lens shows me what is in this business for me financially. I have heard people describe angel investing more as philanthropic charity, but I guess I don’t see it that way. Perhaps discouraged angels develop this charitable attitude hoping it will make them feel better when a company goes under. “Oh well, at least my money gave those nice chaps a shot at their dreams.” Please. I have other outlets for donations. I expect a real IRR from angel investments just as I expect a return from real estate, public equities, hedge funds, or any other financial security.

Looking at deals through these two lenses can often pose challenges because each is subjective and deals are typically heavier on one side than the other…funny how that works. I have had to pass on some pretty interesting businesses because I felt the investment was unsatisfactory for some reason.  I have also passed on a great investment offering because the business is weak, but this is not as much of an internal struggle. So I look for the great business that is offering a fair, compelling investment opportunity that can make everyone involved googles and googles of money.

Note to Readers: I am supporting a movement to use corporate names as adjectives and nouns in conversational language. examples: “Maam, I just spent my last Digg, and all I have are paypals. Can you give me change?” or “Whoa, that guy seriously had a youtube head…it was like an orange on a toothpick.” or “That chili dog made me feel a little myspace. I better use the restroom.”