Angel investors participate in the ‘concept risk’ stage of the venture. i.e. when neither the idea,product/service, business model, operating plans nor the assumptions are proven.
It is also the stage where the startup is most likely to be resource starved.
Angel investors should assist the founders with everything they can, to help the company go past the concept risk stage. Often, this could also be about providing guidance and perspective to help entrepreneurs take the right decisions. In many cases, introductions to potential customers; partners;employees and mentors etc. at this juncture of the journey is invaluable.
Often angel investors have to be the adult supervisors, alerting the founders when they seem to go off the mark( read as ‘ strategy’) or when they are trying to do too many things rather than focusing on what is important.
When a startup is not doing well, angel investors have an enormously important role to play in keeping the founders motivated. Failures and challenges in a startup can be demotivating and challenging, making you feel terribly lonely. A good angel investor can make a big difference by just saying “Its okay.. lets focus on what’s do be done”. Often, testing times are tests of character too.
I often tell entrepreneurs that even when they do not need the money, they should go and raise some funds from good angel investors. Because, it’s not just about the money, it’s about the investor’s involvement in your journey and their support when you need it, that counts and contributes to your success story.