3 Warning Signs a Potential Angel is a Competitor
This article was written by Charlie Paparelli.Recently an entrepreneur told me an upsetting story. We started a email conversation in which I was giving him some high-level advice on next steps for his startup. This led to a LinkedIn connection between us. Our LinkedIn connection led to someone in my LinkedIn network reaching out to the entrepreneur.This person represented himself as an angel investor and who was interested in the entrepreneur’s company. He leveraged my credibility as an angel by saying we are both in Charlie’s network. This led to a meeting where the entrepreneur participated in this meeting with complete transparency.A month later the supposed angel called him and said he was working on the same idea and was wondering if the entrepreneur would work for him. This is a breech of integrity.The entrepreneur and I discussed how he might have outed this guy before ever agreeing to a meeting this him. Here is what we came up with:
- Contact the person who has credibility and is being leveraged. In this case the entrepreneur would have contacted me and asked if I knew anything about this fellow’s background and character.
- Ask other entrepreneurs about the prospective angel. Join ATDC and participate in the monthly Atlanta Tech Village entrepreneur events. ATDC also has a monthly entrepreneur night. The entrepreneurs know the good guys in the angel network. It is a self-referencing community.
- Make it a two meeting visit with the angel. If you still can’t find out much about the prospective angel and he still seems real then go slow in the first meeting. Get to know him and his background. How long has he been an angel? What types of deals is he interested in? Is he an executive angel, meaning he wants to work in the company he invests in? Who else did he invest in? Maybe you will recognize the companies and entrepreneurs. At least you can call them after the meeting.
These are just a few methods you might use to qualify the character and integrity of a prospective angel. The entrepreneur and I agreed, if he would have done due diligence on one or two of the above items he would have known who he was dealing with and whether to meet with him at all.You may be thinking why didn't the entrepreneur make the prospective angel sign an NDA (non disclosure agreement)? The answer is that Angels and VC’s don’t sign them.Charlie Paparelli is a successful entrepreneur, professional general manager, and Mentor at Atlanta Tech Village. He is a respected angel investor for over 20 years. He founded and leads the Angel Lounge for angel investors. Get Charlie’s free ebook, “10 Keys to Successful Entrepreneuring” by subscribing to his twice weekly blog.