Can metrics help angel groups?

Angel groups only survive because their members invest of their own time and energy. All of us group managers struggle with how to increase levels of activity. More=better.

With our portfolio companies we don’t settle for prose-laden emails and verbal updates… we demand cold, hard metrics.  Metrics force a clear conversation that, if chosen correctly, are a powerful driver of success / indicator of impending doom.  Most of us use metrics to monitor our personal progress in life & business: weight, miles run, calls made, dollars raised, etc.  So can we create some metrics for our members to help them have a clear picture of how much they are helping their angel group succeed?  I think yes.  In fact, we already use some metrics: #deals closed, $’s invested, # of members.  But those are group-specific and miss a LOT of good stuff in between.  What if we tried to…

  • Measure Contribution –  Attend a meeting, run a due diligence effort, attend a conference to scout out deals, recruit a new members… all of those help a group.  So let’s measure them.  Take the time invested, multiple by a billing rate (maybe $500/hr) and call it their contribution.  Let’s define the sum of all contributions from all members of an angel group as the group’s “Valuation.”
  • Communicate It…
    • In every email, and at every meeting, show the “Valuation” of the angel group and how much it has increased over the past 3 months.  This helps remind everyone we are in this together, we are working to grow the group, and are making measurable progress.
    • In every email, and at every meeting, recognize the members who have made the largest contributions to the group’s valuation.  Do it for the top people who have done the most in each important category: dealflow, recruitment, helping portfolio companies, etc.
    • Go beyond recognition and actually give people some simple, but appropriate, gifts as tokens of thanks.  Nothing fancy is needed, accredited investors don’t need gifts.  But all of us like getting them.  These can vary from plaques given out at an annual social event to far simpler things like $5 Starbucks gift cards and group-branded clothing.

Implementation: Everything listed above can be prototyped using GoogleDocs without a line of code for no out-of-pocket cost.  The gifts can be prototyped for <$1000.

As always, thoughts and feedback are welcome.

UPDATE 8/3: Brian Case of Bradway Financial made a great recommendation: expand the startup company metaphor.  Keep Valuation as a measure of total contribution.  But keep going.  If angels are partners in making the group a success, treat them as such.  Issue them “shares” that correspond to their contribution (each share is a dollar, each dollar’s worth of contribution translates into a share).  Then, at each meeting, display the angel group’s cap table – listing all the members and their ownership in the angel group.  Note: no real shares are being issued, there is no legal entity the angel a part of… this is all a metaphor, but one that makes sense to angels.  It reinforces that all the angels are partners in making the venture a success and it makes it instantly clear which angels are making the biggest contributions and who we should be thanking.

5 thoughts on “Can metrics help angel groups?

  1. I’ve updated this post significantly since its original version thanks to the feedback sent in so far. My thanks to David Verrill, Christopher Mirabile, Brian Cohen, and Aaron St. John!

  2. I like the idea that becomes sort of like a co-op: the more you contribute, the less it costs you. I believe one local angel group did this by essentially saying that if you invest in x deals per year, you get a good amount of credit on the next year’s dues.

    I wouldn’t trivialize this by calling it the “gamification”; since I view investing as a for-profit activity, I think the association of “game” and “investing” is unfortunate, but the idea of rewards for investment–in time, talent, or money–is what it’s all about. But please don’t set the rewards as something befitting the PTA raffles. Keep it in cash, not trophies.

    1. Ty, I agree that this should not be trivialized. Finding the right set of forms of recognition will be a trial & error process. That said, the $5 gift card example seems a powerful reminder that rewards need not always be of significant monetary value. After all, Angel Investing isn’t really “profitable” for >80% of angels IF THEY FACTOR IN THE COST OF THEIR TIME. But they don’t because the time invested is fun… there is a non-financial ROI for being an angel. As such, I imagine many non-financial forms of recognition would be very meaningful.

      As for monetary rewards – then you get into the issue of actually putting a dollar value on people’s time. If you give them any reasonable billing rate, than any member who spends at least 4-8 hours A YEAR will earn more than their dues-level… so where will the budget deficit come from? Will inactive members pay more? Not in my experience. So my hope is to put the money thing on the side by making this about recognizing contribution to the group. All members have to pay their dues to keep the group economically sustainable.

  3. Years ago I was awarded a Starbucks coffee cup of an unusual size. I use it almost every day and I appreciate the simple ‘thank you’ that came with this token – the recognition of my efforts at the UCIrvine Dance Department.

  4. Pingback: Interview on The Frank Peters Show! « Paul G. Silva

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