ENT (640) – Winning Angels: Evaluating

As we continue into the next phase of the book and learn about the evaluation phase, it is essential to understand its importance and how it applies to future entrepreneurs.

Whether we approach the evaluation phase of early-stage investing from the angel’s perspective or the entrepreneur’s perspective, one can argue that the most important aspects we can take from the Winning Angels book on this topic are the two Framework types, Risk management, and the way one handles and deals with rejection.

As the author mentioned, and as many expected, the evaluation stage is a very lengthy process that begins with the first meeting and continues through the end, up to the moment of writing the check (Amis & Stevenson 2001).

As entrepreneurs, we play a vital role in the evaluation phase, hence the inclusion of entrepreneurs as the primary group in the “people” category of the Harvard Framework. The entrepreneurs are doing and managing the most critical aspects of the company, such as raising capital, building the services, hiring the staff, investing, and marketing (Amis & Stevenson 2001). To this point, most experienced angels eventually end up relying on the entrepreneurs and their teams during the evaluation. The most important quality the angels are looking for in the entrepreneurs is integrity. Therefore, as aspiring entrepreneurs, it is imperative to be true to ourselves, the project, and our teams by sticking to the mission, vision, and core values of the business.

The second most important aspect the angels evaluate, as mentioned in the Harvard Framework, is the business opportunity, which consists of model, customer, timing, and size. As entrepreneurs and the students of Entrepreneurship, we are already familiar with some tools that may help us generate a winning opportunity. While wondering what tools like Porter’s Five Forces analysis in the previous class would be beneficial for, now I have a better understanding of what role it plays and how it can be beneficial when pitching the business opportunity to angels and other investors. Even though the business model, or the sort version of how the business will make money, is the essential aspect of the business opportunity, the questions raised regarding the customers, timing, and business size are as important aspects as the model is. They provide essential insight into the business structure and help angels determine whether to proceed or pass on the investment opportunity.

Once the investors invest, they must mitigate the risks and pass it on to others as the process continues. One way to do that, according to the author, is to master the seven fundamentals of investing.

As we look at rejection, it is important to realize that being rejected (as an entrepreneur) or rejecting the deal (as an investor) is a learning opportunity for both. From the investor’s side, while rejecting a deal, they should consider doing it timely and clearly through constructive criticism. According to the author, giving tough, quality feedback is the best thing an investor can do for an entrepreneur; however, this is recommended only for the investors who have done several deals and are qualified to give feedback (Amis & Stevenson 2001). We, the entrepreneurs, should take the feedback, learn from it, and move on. If the investor is not interested in most cases, they may recommend the deal to other investors they network with. The bottom line is, do not burn the bridges or annoy the investors. If the deal does not work, any attempt to force it will only hurt your reputation, credibility, or an opportunity to get funded by another investor potentially.

Stay smart, stay vigilant! When the opportunity strikes, be sure you are ready to impress!

Amis, David, and Howard H. Stevenson. Winning Angels: the Seven Fundamentals of Early-Stage Investing. Financial Times Prentice Hall, 2001.


  1. Semir,
    Risk management and rejection are both important factors that every entrepreneur must consider. Winning angels want to ensure that a company is worth investing their time and money. In order to determine worthiness of a company, winning angels must look a mission and value within a company to see how employees meet the criteria established by the business. Rejection seems to be one of the main struggles for entrepreneurs and people in general with everyday life. Over time, we will always encounter some form of rejection that we must know how to properly address to fix the problem and move on. I agree, no one should ever “burn bridges” with potential investors as we never know when we may need those people again. Excellent post!

    1. Audrey,
      Absolutely, the risk management and rejection are present in every endeavor. It’s our ability to mitigate the risk and accept/process the rejections that sets apart the winners and losers. It is understandable that any investor, including the angels, would do a substantial due diligence on a company before considering the next step.
      As always, thank you for a constructive feedback!


  2. At times I prefer rejection because I want to see where I can improve. People tend to tell you more on where you can improve when you are rejected rather than accepted. I haven’t reached out to have investors yet, but I hope when I do they give me opportunities to improve if they see an issue with the way my business is being handle. As entrepreneurs it is important to always continue learning and improving as you go. Anyways, I look forward to reading more of your work!

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