According to the book, “Winning Angels,” by David Amis and Howard Stevens, angel investors “follow participation roles that are a combination of the needs and wants of the entrepreneur, the company, and themselves.” (Amis & Stevenson, 2001) Basically, this means that, sometimes, the role of an angel investor is nothing more than being an investor and, other times, it means an angel will take on more hands on responsibilities.
The five participation roles of an angel investor are: silent investor, reserve force, team member, coach, and controlling investor. Here is a breakdown:
- The silent investor’s role is to fund the project. Nothing more. Nothing less.
- The reserve force investor will not only provide funding, this angle will also provide help to the entrepreneur, depending on skill set, as needed.
- The team member investor will become a member of the team, just as it sounds, helping out with various projects if the need should arise.
- The coach investor does not have a controlling interest in the company; however, this angel will guide the entrepreneur and team by giving constructive feedback throughout the process.
- The role of the controlling investor is just as it sounds. This angle takes over and controls the company.
The needs of the entrepreneur and the needs of the investor will determine which role, or roles, the investor will play in the company. Personally, I feel like the coach investor role benefits the entrepreneur the most, because it allows them to maintain control of this, while getting valuable input from the angel investor. In the flip side of that, it seem the angel who takes on the controlling role would have the final say of what goes on in a company, whether or not it turns out to be in the best interest of the entrepreneur. Just a side note, the type of business (product business, service business, retail business, or e-business) also plays a role in this dynamic. It all depends on the strengths and weakness of both parties involved.
Amis, D., & Stevenson, H. H. (2001). Winning angels: The seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.