The two questions to ask a Potential Angel Investor
Someone recently asked me what are the two key questions that they should ask a potential investor (angel).
I asked him, what he was thinking about asking. he gave the answer that is usual in all startup conference panel discussions — a) what value can the investor add b) if he wants a board seat etc etc.
Well, they are valid ones, but the most crucial two questions aren’t those.
The crucial questions to ask are these :
1. Does he really have the money — in liquid, in the bank right now? (There are a lot of people who are eternally planning, and don’t have the cash and would simply waste your time)
2. What is the source of this capital — is it personal money, managed for someone else or a family business trying to “diversify” (there are also shady folks trying to invest into startups to clean the money, and to buy time for the money so that it escapes the radar)
You can get the answers for these two, and then decide on all the rest.
And Oh, the mistake that most entrepreneurs make is getting an angel, too involved. Most angels are also operators — and if you ask them to get involved, they seldom know where to draw the line. The best of angels (that I have seen) are hands off, and unless you go to them for a specific issue, they wont get involved, and will let you figure things out. That is in fact the right thing.