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3 ideas of Angel Investing: The Jockey, The Horse and The Track.

Build something and sell it

Anthony Clarke
Anthony Clarke

Anthony Clarke shared his expertise during the 1 ASEAN Entrepreneurship Summit 2015 on November 20th at a workshop catered for angel investors.  Below is part of his presentation base on editor’s summary and is only for general reference purpose.

The Jockey

The Jockey is the MANAGEMENT of the company.  Jockey is the essential part of the business that the investors investing to.  If they get it wrong, the investment will fail.  They have to be good in selling and the founder(s) must be the best salesmen for whatever they can do.  It is important that the jockeys in that team have proper financial commitment in the company.   These entrepreneurs must be able to build something and sell it, which might take 5 years or 7 years.  Then investors will be able to sell their portions to the bigger buyers and exit.  It is to build something and sell it.

The Horse

The Horse means the BUSINESS.  Firstly, it is very important to look at the Intellectual Property (IP) and make sure it is owned by the company.   By then, there must be pain factors (demand / needs) in the market that the investment can solve.   Generally, investors may not able to know how and what inside the black box, but rather need to know what the outcome of the business is. When the business goes into the market, it have something special and niche that can scale and potential for explosive growth.    Lastly, do not back lifestyle businesses or entrepreneurs that literally just building a business on their life.  Investors will never be able to get out from the business.

The Track

The track means the DEAL. The first thing to make sure is not to over pay.  Angels have a habit of over paying because they get too excited.  Thus, take time to negotiate for the fair value.  On the other hand, angels should conduct due diligent on the entrepreneurs before they pitch and check their back ground before investing.  Furthermore, investors need to be careful on the dilution if the investment is capital intensive.   The investment will be diluted if many subsequent rounds prior to exit.  Angels must aware that the capital invested is meant for medium to long term.  Thus, they must make sure that they have suitable protection within the company invested.  It is very important to have the personal warranties from the founder(s) on varies operational aspect of the business.

 

About the Presenter:

Anthony Clarke

Co Founder & CEO of Angel Capital Group, UK

 

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