CEOs are exceptionally well positioned to become influential Angel Investors in their retirement. Paul Doany explores the benefits and considerations of making the transition.
Chairman, WBAF Global CEO Alliance Club
World leaders, and the global business community at large, are united in acknowledging the role that Angel Investment can play in economic development. In 2017, G20 leaders announced this as a priority, drawing attention to the need for more Angel Investors. Public policy gives much focus to aiding the ‘supporters of entrepreneurs’, and the expertise and networking that Angel Investors can offer to startups. Even in retirement, CEOs that turn to Angel investment to support startups can be instrumental in providing more jobs, wealth for economies, and social justice.
There is nothing new about Angel investment, but at this point in time, it is emerging as a crucial asset. Angel investment in early-stage equity markets is an essential component of short and long term economic health. More than financial assistance, startups need the knowhow CEOs can provide to fill in gaps in entrepreneurs’ skill-sets. Many CEOs have wide networks and plenty of experience over the years in overcoming challenges in business, but they tend to retire after achieving successful careers, missing out on the chance to help fledgling businesses generate revenue and add to their portfolios.
When retired, CEOs have more time to dedicate to mentoring entrepreneurs, and can offer access to both finance and key industry networks. The one essential they may not have is a working knowledge of the principles of startup investment and growing a business from scratch. On the other hand, the missing ingredients for entrepreneurs are the mentoring, the finance, and the network that investors can provide.
It is all too easy for Angel Investors to fall into the trap of investing in the jockey and not the horse. The decision to invest should not be a quick one, as there are many important points to consider. How important is the investor’s personality and background, and how do they prefer to learn about the entrepreneur? Should third party input be sought? With so many considerations necessary when starting out in Angel investment, CEOs can benefit from seeking their own mentoring from their network of industry experts. Principles of Angel investment, and the ways that they apply in real-life situations, is crucial knowledge for those contemplating becoming investors. Learning through the experiences of established investors is an important link in the chain of mentorship, on which Angel investment is centred.
MORE THAN JUST MONEY
Many investors consider themselves ‘value-added investors’, with the satisfaction of making a difference to an entrepreneur ranking as important as the capital they bring to the table. Among the value-added advantages they contribute are: industry experience, creative ideas, contacts, and the ability to mentor. When an Angel is valued for more than the money they contribute, their involvement is likely to be more multifaceted.
To conclude, CEOs contribute human power built up of management skills and business networks, while entrepreneurs contribute human power in the form of creativity and independence. Angel investment unites these two power sources through a common goal of growing a business and making it a success. The transition from CEO to Angel Investor is an exciting and fulfilling one to those who dare.