COMMON MISTAKES MADE BY INEXPERIENCED NOVICE INVESTORS

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Here are some of the most common mistakes that people make in the business angels (+) inexperienced or when they begin to make their first investments.

• Investing without an investment strategy:

  • Invest in one or two companies and see what happens.
  • Investing without having previously defined the total amount to be invested, the risk profile, the number and type of companies sought, the degree of involvement, and the time horizon.
  • Invest more than 10 per cent of liquid assets.

• Investing too early: falling in love with "the first person who walks by".

• Be impressed by the entrepreneur:

  • Good entrepreneurs are interesting people, with initiative, easy to communicate and hard-working, they are convinced and have great drive and enthusiasm.
  • But the bad guys are like that too. Therefore, these traits do not help us to distinguish between them.
  • Investing only in people, without giving importance to the business model.

• Investing with customer criteria.

• Confusing a viable business with an investable business.

• Investing alone.

• Investing "in herd" (as opposed to investing in network): 

  • Invest because Vincent invests.
  • Failure to conduct its own analysis and due diligence.

• Think that you are only negotiating with the entrepreneur in front of you and that this is a one-off deal.

• Wanting to be an entrepreneur rather than an investor. 

• Do not save at least half of the money for the next rounds.

• Investing in a company without proper research:

  • It is important to thoroughly research the company, its team and its business model before investing.

• Investing in a company that is not a good fit:

  • It is important to make sure that the company and its business model are a good fit for your investment interests and preferences.

• Investing too much money in a single company:

It is important to diversify your investment portfolio and not to invest too much money in any one company.

• Not understanding the ownership structure:

It is important to understand the ownership structure of the company before investing and to ensure that it has an attractive structure for investors.

• Not understanding the business model:

It is important to understand the company's business model before investing and to ensure that it is viable and scalable.

• Do not see the exit plan:

It is important to establish an exit plan before investing and to ensure that there is a strategy for exiting the investment with an adequate return. The EXIT 

• Failure to establish a good relationship with the promotion team and especially with the CEO:

It is important to establish a good relationship with the business team before investing and to ensure that they are committed and passionate about your business.

By avoiding these mistakes, you can increase your chances of succeeding as a business angel and getting an adequate return on your investments.

HERE ARE SOME TIPS TO AVOID COMMON MISTAKES AS A BUSINESS ANGEL:

1. Conduct a thorough investigation: thoroughly research the company, its team and its business model before investing.
2. Diversify your investment portfolio: do not invest too much money in one company and diversify your investment portfolio.
3. Understands the ownership structure: make sure you understand the ownership structure of the company before you invest and make sure it has an attractive structure for investors.
4. Understand the business model: make sure you understand the company's business model before investing and make sure it is viable and scalable.
5. Establish an exit plan: be sure to establish an exit plan before investing and ensure that there is a strategy for exiting the investment with an adequate return.
6. Establish a good relationship with the business team: make sure you establish a good relationship with the business team before you invest and make sure they are committed and passionate about their business.
7. Learn continuously: stay up to date on the latest trends and developments in the venture capital market and continuously learn how to improve your skills as a business angel.

By following the advice we give you at mentorDay Business Angel School, you can reduce the risk of making common mistakes and increase your chances of succeeding as a business angel.