Are angel investors God’s stupidest creations?

From treating a board seat as a trophy that makes them look sexy to creating ‘nuisance’ value, angel investor Ajeet Khurana takes a jab at his own kind

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I can get away with a headline such as this one as I am an angel investor. And not just any angel investor, but one that has the dubious distinction of being labeled as one of India’s top 15 angel investors for 2013. With that preface, or should I say disclaimer, let me proceed with my rant!

11 things ‘angel’ investors are guilty of:
1. They summarily reject an  entrepreneur’s idea without understanding it.

2. In those rare cases when they do attempt to understand the idea, they seem to have no alternative but to map it on to another idea that they had earlier come across (“Oh! So you are like Facebook Events with a Maps feature!”)

3. If they are asked for advice, they always give it — even if they lack the most rudimentary understanding of what is being discussed. Somehow they never learned to say, “I’m sorry I have no idea!”

4. In the term sheet, they want to reserve every possible right that can be conceived. Yet, they do not spend time reading their own term sheets well. As a result they end up in sticky situations down the line.

5. They treat a board seat as either a God given right, or as a trophy that makes them look sexy.

6. In panel discussions they talk about the insignificance of ‘valuations’ as an investment decision-making criterion. But during valuation discussions, they negotiate endlessly.

Also Read: Echelon 2014: What is wrong with angel investors and accelerators?

7. One way angel investors sell themselves to entrepreneurs is by promising them value in addition to the money they will invest. Upon investment, this value is usually nuisance value.

8. Every angel investor has woken up one fine day and decided that they wanted a status report of some kind. Since the entrepreneur is swamped and unable to give the unscheduled report immediately, the angel investor gets nervous and sets up conference calls and meetings — thereby worsening an already bad situation.

9. They actually like saying, “I am an angel investor,” then pause; hoping that the listener would break into spontaneous admiration.

10. Very few of them actually make money. They know this, but they have not started calling themselves ‘angel hobbyists’ yet!

11. The most fun are those angel investors who act as a pack, also referred to as an angel network. This is one of those few examples where the more the number of otherwise great people that come together, the lesser value they cumulatively create.

Disclaimer: All my angel investor friends who are reading this article, are exceptions to the above. They are fabulous people, and you should reverentially bow down to them every time you cross their path. And you are not allowed to snigger when you are bowing down.

The article was first published on LinkedIn.

Image Credit: David Goehring at flic.kr/p/9KU6T1

Ajeet Khurana

Ajeet Khurana has two decades of experience in getting businesses off the ground as an entrepreneur, innovator, investor, and mentor. He founded businesses such as KITS and Corpus Collosum Learning. Ajeet works with startups, and helps them scale. Rated one of the top 15 angel investors in India for 2013, he has invested in companies such as: Rolocule Games, Carve Niche Technologies, PickMe eServices, Karmic Lifesciences, United Clothing, Maximojo, United Mobile Apps, Avaz, Shephertz, among others. An engineer from the University of Mumbai, and an MBA from the University of Texas at Austin, Ajeet's strength is: preparing startups for go-to-market, fundraising, and scale.

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  • Daniel Maggs

    Congratulations on taking the opportunity to sh*t on your peers!

  • Deep

    I don’t think its question of sh*ting on peers, its simple good and bad apples. These days I see tons of these, like we too have our peers who like to have “serial…”, “valley…” or “sv…” entrepreneur when referreing to themselves :)

  • Ajeet Khurana

    Read carefully Daniel, and you will notice (i) it’s not only about the peers (ii) you probably are taking things too seriously :)

  • Ajeet Khurana

    Hey Deep, thanks for reading my article :)

  • Eric Entrena

    Hats off Mr. Khurana! It takes some guts to face this subject in a direct manner and not use some diplomatic skills to sugar-coat it. You went straight to the point and that honors you. Seems like, unfortunately, money and power can change the minds of those who once they were humble entrepreneurs fighting to see their dreams crystallize. Thanks for your honesty. Faith in angel investor’s humanity restored!!

  • Ajeet Khurana

    Thanks Eric. What I find especially interesting is my fellow angel-investors’ reaction to this piece. For one, none of them were offended. Also, none of them denied the truth of what I said. So, I too have my faith restored :)

  • http://www.Goodorama.com Eric Entrena

    Now let’s see if any of your fellows shows up and supports your words… our faith will be automatically boosted at 100%!! :)

  • Ajeet Khurana

    If you will check out the LinkedIn link (where this post was first published), a couple of angel investors have supported my thoughts :)

  • http://www.Goodorama.com Eric Entrena

    Right on!!! :)

  • http://www.Goodorama.com Eric Entrena

    Dear Ajeet, would you allow me to break some protocol rules here and let me know how to send you our Pitch Deck for your consideration? Something tells me that you’re exactly the kind of person to join forces with and (literally!) together make the world a better place. If you accept my request, you will understand what I mean. ;) Thanks in advance!!! Much Respect!

  • Ajeet Khurana

    You can send it to me on LinkedIn or by email at ajeetkhurana at gmail. Although I must also point out that the likelihood that I would invest much outside my location is very low. (Hey, I never said was rational, did I? :)

  • http://www.Goodorama.com Eric Entrena

    Fair enough!!! I know it’s a long shot, but, hey.. why does it have to be rational..?? Thanks a lot for the opportunity! ;)

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