Aaron, in the case of your OH question, would you advise that the investor maybe just get some sweeter terms to incent their participation? It seems like their investment makes the investor want the company to succeed to get their return, justifying further time investment. (That’s a pretty common reason for angel investing in my experience - people who want to dabble with a startup but not commit their valuable time.) If the person wants to participate and add value, and if the money is that valuable to the startup, is a two-note strategy - one for the cash, another for an advisory commitment - a good idea?
A lot depends on the stage of the company. Also, I'm admittedly a bit biased after some bad experiences. But I tend to find that -- particularly early in a company -- money is not a good substitute for time.
To be clear, it might **seem** like a good substitute, but it creates lots of issues.
Personally, investors who also tried to "dabble" in my startup created lots of extra work for me. It was like having team members that wanted to have equal opinions, but, in order to have those opinions, I had to keep them informed because they missed half the meetings. In other words, it just took lots of my time in order to save them time. At that point, their money wasn't helping me as much the cost of including them was hurting me.
Investors should provide value with money, high level advice, and resources that you specifically request of them. But they shouldn't be involved in the day-to-day. The good ones know this and understand what kinds of value they bring. The bad (or inexperienced ones) tend to think they can also be valuable part-time employee, and that's just not particularly helpful to a young company.
Aaron, in the case of your OH question, would you advise that the investor maybe just get some sweeter terms to incent their participation? It seems like their investment makes the investor want the company to succeed to get their return, justifying further time investment. (That’s a pretty common reason for angel investing in my experience - people who want to dabble with a startup but not commit their valuable time.) If the person wants to participate and add value, and if the money is that valuable to the startup, is a two-note strategy - one for the cash, another for an advisory commitment - a good idea?
A lot depends on the stage of the company. Also, I'm admittedly a bit biased after some bad experiences. But I tend to find that -- particularly early in a company -- money is not a good substitute for time.
To be clear, it might **seem** like a good substitute, but it creates lots of issues.
Personally, investors who also tried to "dabble" in my startup created lots of extra work for me. It was like having team members that wanted to have equal opinions, but, in order to have those opinions, I had to keep them informed because they missed half the meetings. In other words, it just took lots of my time in order to save them time. At that point, their money wasn't helping me as much the cost of including them was hurting me.
Investors should provide value with money, high level advice, and resources that you specifically request of them. But they shouldn't be involved in the day-to-day. The good ones know this and understand what kinds of value they bring. The bad (or inexperienced ones) tend to think they can also be valuable part-time employee, and that's just not particularly helpful to a young company.