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.
Paul G. Silva 