TechRanch Blog

Ok, that's overstated and misleading, but nonetheless catchy right? It's meant as a lead in to my first point that these two groups of people are more different than men and women, dogs and cats or proteins and carbohydrates. It's also meant to indicate my degree of frustration in trying to connect angels with entrepreneurs and vice versa. It's like introducing your pretty friend to some person you really don't know - without checking the on-line violent offender database. I'm pessimistic, but the probabilities are very high that this match-making fails miserably on the front in which the angel tells me "why in the heck did you waste my time on that deal" and the entrepreneur tells me "why the heck did you waste my time on that guy?" Or it fails miserably on the back in which the angel is forever unapproachable to me. Why you ask?

Entrepreneurs won't do the work. First time entrepreneurs have no concept of the difficulty involved in raising capital and the effort that must go into it. They usually think that someone is going to make an introduction to an angel on their behalf, that the entrepreneur is going to have a meeting and then the phone is going ring a few days later. "I'm in, where do I send a check?" I used to think that I could instill an appreciation for the complexities of the process and even coach entrepreneurs towards a successful fundraising event. Silly me.

Entrepreneurs think about growing a business, not about creating value for shareholders. This is a subtlety on first look but becomes a major issue in board meetings where strategy is discussed. It's especially evident in issues of staffing and raising additional capital.

The only individuals who an entrepreneur should approach are those who have known the entrepreneur, in a professional relationship for many years. Sure, we all talk about many investments lasting longer than marriages and usually we have a little laugh about that. But it's true. You damn well better know the person in this relationship – it's going to be a long one. I'd advise that people treat this like a marriage but since half of all marriages end in divorce and most businesses fail, the odds are no good either way. Most entrepreneurs leap into bed with angels like broke crack whores in need of a fix.

I'm not going to let angels off the hook either.

Angels see businesses in very structured ways and those opportunities that don't fit into the structure are not considered. Call it pattern mapping or something else – it's quick, dirty and in-effective. They apply lessons learned from previous investments to new investments – regardless of the applicability. "The previous company had a weak IP position – I'll have to watch out for that one here."

Angels look for their own traits embodied in the entrepreneurs in whom they invest. If they were technologists who ran a company, they value that sort of entrepreneur. If it's an opposite personality type, watch out as angels often try to transform the entrepreneur – to teach an old dog new tricks. Yeah, that'll happen.

Angels are impatient. Investment time moves slow. Entrepreneurship time moves fast. Ask an entrepreneur how long he or she has been working on a business and the answer will be half as long as reality. Ask an angel how long he or she has been invested in the business and the answer will be twice as long as reality. It's dog years v. tortoise years. Angels overvalue the ancillary benefits that they bring to a company or an entrepreneur such as ... advice. "Back in my day, when I was selling System 3's, we provided customers with an on-site technician. You should think about that for, what'd you call it, an SaaS application?"

Joking aside, angels and entrepreneurs are different. It's hard to put them together. I'm starting to think they should come together on their own.