SWO Angel Group

Motivation and Mentoring in Angel Investing

February 6, 2018

Author: Dennis Ensing

In preparing to write about this topic, I found that much has been written and is available online, with varying conclusions:

“I have completely quit angel investing, and I’m telling you to never start. Be clear: Angel investing as an activity is great. When the right people do it the right way, great companies are created and everyone wins. I’m not reversing my position on the activity itself, only on who should be doing it.” [1]

“Here’s how angel investors differ from venture capitalists. Typically, angel investors have a triple bottom line. First, they’ve “made it,” so now they want to “pay back” society by helping the next generation of entrepreneurs. Second, they’d like to stay current with technology and tinker with interesting products and technologies. Finally, they want to make money. Thus, they are often willing to invest in less proven, more risky deals to provide entrepreneurs with the ability to get to the next stage. I know many nice venture capitalists, but I cannot tell you that many of them are motivated by the desire to pay back society or seek intellectual stimulation.” [2]

Pictured here is a great summary by our affiliate, York Angels, from their presentation, “An Angel Investing Overview”.

With the above context, what about our group here in London, SWO Angels? Late in 2017, we surveyed our members to assess overall engagement and to provide us with insight into their relative characteristics. Here is what we found out.

Our SWO Angels members see more benefits to participating than just financial return, including investing in the community, networking with like-minded people, and the learning opportunities that we offer. It should go without saying that our members are tolerant of high risk, but it is tempered by the belief that our direct contributions of expertise and connections will positively impact the venture. While they are interested in contributing to the region (i.e. job growth/local economic development), it is not the most important factor when making a personal investment decision and we are geographically agnostic. They are also interested in contributing to the success of the group as a whole and leveraging the diversification that comes naturally from investing together.