Investing In People (Not Businesses)

Over the past five(ish) years, I've made twenty-odd investments.?

Most of these are not in businesses, or startup ideas - but in the individuals behind them.

This isn’t talked about enough, but this is a huge thing in angel investment that I wish someone had broken down for me in the early days. The fact is, investing in people is a much longer-term (and rewarding!) investment than backing a business idea. In fact, it often pays off x10 and can lead you to outcomes you’d never have expected.

As angel investors, we play a vital role in shaping the future of innovative startups. Yes, the financials and business plans have to be considered, but they don't tell the whole story of a startup. The person driving the business is what can set genuinely great ventures apart from the ones that are just “okay”.?

Today’s cheatsheet looks at this from my perspective as an investor, with the goal of giving founders an understanding of what this might look like for them.

I’ll caveat this by mentioning that these are my personal preferences. For founders, I’d encourage you to consider the kind of investors you want to build a long-term relationship with. This is not a one-and-done approach. For investors - look at your own markers of an individual worth backing.

What I’ve looked for in people I’ve invested in:

1. Trustworthiness & self-awareness

For me, it all starts with trust. I’m interested in founders who are not only honest but also highly self-aware. Someone who understands their strengths and weaknesses is better equipped to navigate challenges and make informed decisions. This level of self-awareness also often translates into humility and the ability to seek advice and learn from others. Lots of green flags.

2. Embracing strengths & acknowledging weaknesses

Nobody is perfect. I’m always looking for founders who embrace their strengths while openly acknowledging their shortcomings. Self-awareness in this regard is a valuable trait that enables founders to build well-rounded teams to complement their skills. As an investor, I appreciate when founders are upfront about areas where they may need assistance and are proactive in seeking the right talent to fill those gaps. This level of honesty and openness creates space for a collaborative and growth-oriented culture within the startup. Essential for long-term success.

3. Strong industry understanding

Successful founders don’t just understand their own business - but also the broader industry space that they’re operating within. They have a clear vision of where they fit into the market landscape and how they can create a unique value proposition. This means that they can better navigate market dynamics, anticipate challenges, and capitalise on emerging opportunities. As an investor, I appreciate founders who stay informed about industry trends and are constantly seeking ways to innovate and stay ahead of the curve.

Investing in people is a strategic decision that requires a long-term perspective.?

While investing in businesses may get you quick returns, investing in the right individuals has the potential to unlock totally unexpected opportunities. Case in point - when I invested in Claudia’s company. Founders with the right blend of traits have the resilience to navigate difficulty, the resourcefulness to pivot when needed, and the motivation to keep pushing forward despite obstacles.

Angel investors have a unique opportunity to not just provide capital but also to support the journey of extraordinary entrepreneurs. Investing in them means they become partners in their journey to success. The role can extend beyond writing checks; it can involve acting as an extended network, offering guidance, and providing support along the way.

People are at the core of every successful business.

Ultimately, that starts with the founder.