The world of entrepreneurship is complex, challenging, and often unpredictable. Early-stage startups, in particular, face many obstacles as they strive to establish themselves and grow their businesses.
That's where angel investors come in. Besides providing financial support, angel investors can play a critical role in mentoring their portfolio companies – and the right mentorship can often make all the difference, especially in times of crisis, such as the recent collapse of Silicon Valley bank and Significant Bank.
As veteran angel investor Vivek Khare advises, you can’t pick winners; you have to make your startup winners.
Here are five ways angel investors can support and mentor startups in their portfolio.
Provide financial support
One of the most obvious ways angel investors can support their portfolio startups is by providing financial support in the form of additional investment, bridge financing, or even a loan. Offering financial support can be especially helpful in the current economy as we see a banking turmoil unfold amid a prolonged period of funding winter. Venture capitalist Vinod Khosla and OpenAI chief executive Sam Altman are among those who have come forward to extend financial help, following the collapse of Silicon Valley Bank.
Connect startups with relevant networks
Angel investors often have extensive networks that they can tap into to help their portfolio startups. Introduce startups to potential customers, partners, and investors. By connecting their portfolio companies with relevant connections to address their roadblocks, angel investors can help startups gain credibility and accelerate their growth.
Angel investors can also offer advice on how to network effectively. They can help startups develop a pitch that resonates with potential customers or investors, and provide guidance on how to build relationships that can lead to long-term success.
Angel investors are often experienced entrepreneurs themselves and can provide valuable guidance on a range of pain points in running a startup such as managing cash flow to pivoting the business in response to changing market conditions or managing staff during a crisis.
Be their sounding board
Startups often face a lot of uncertainty and ambiguity, and it can be helpful to have a trusted advisor to bounce ideas off of. Act as a sounding board for their portfolio companies, providing feedback and guidance on new ideas or initiatives.
Listen to the startups in your portfolio, ask probing questions, and help them refine their ideas and help them think through tough decisions – whether it's deciding on a pivot strategy or weighing the pros and cons of a potential acquisition. However, make sure to leave enough room for the startups to take the final call.
Offer emotional support
Startups are often founded by passionate entrepreneurs who have invested their hearts and souls into their businesses. However, they may feel overwhelmed at times. Angel investors can offer emotional support to founders, reminding them that they are not alone and that they have people who believe in them.
Any encouragement from an investor can help the founders stay focused and motivated in times of uncertainties.
(To learn more about angel investing, explore Learn by LetsVenture, a destination portal for lessons across stages of angel investing and free resources.
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