This week’s blog post focuses on the importance of evaluating business opportunities as it relates to angel investing. When it comes to investing large sums of money in an early-stage company, doing your homework as a potential investor is very important. In the book Winning Angels, the authors discuss an evaluation framework developed by William Sahlman and Howard Stevenson at Harvard Business School. The elements of this framework consist of the people, the business opportunity, the context, and the deal. These are the key elements that should be taken into consideration when evaluating an investment opportunity.


For this post, I want to focus on the people aspect because it really put an emphasis on the entrepreneur. At this stage in my life, I am focused on entrepreneurship and this topic really helped me understand what potential angels may be looking at should I get to the point of needing investors for a business idea. From reading this book and talking to other successful business minds, I have gathered that the entrepreneur and his team are ultimately the most valuable aspect of securing the investment of an angel. General Georges Doriot, the founder of modern-day venture capital, is quoted saying “I will invest with an A-quality man with a B-quality project, but not the other way around.” I love this quote because it makes so much sense. The entrepreneur/inventor is the engine behind any early-stage business. A product is no good if it doesn’t have a powerhouse willing to put in the long hours required to help get the product to market.


So what characteristics do angels look for in an entrepreneur? First and foremost, a good entrepreneur exemplifies perseverance. They will find a way to win and be successful. Other important characteristics include honest, courageous, competitive, resilient, charismatic, and intelligent. Some of these seem pretty obvious and can certainly be faked during a one-off meeting. Therefore, experienced investors will take them time vetting an entrepreneur to make sure they are who they appear to be. They will ask the entrepreneur countless questions. They will reach out to references provided by the entrepreneur to find out more. They will ask around to other people in the related industry to see if they can find any information on the entrepreneur. By the end of it all, there is no hiding what type of person you are and what type of entrepreneur you will be.


In conclusion, the entrepreneur is one of the most important aspects for angel investors to evaluate when considering a potential investment. The extent to which angels are willing to investigate when they are putting large amounts of money on the table is rather considerable. Therefore, as an aspiring entrepreneur, I am further realizing the importance of networking and building the best reputation I can for myself. Researching this topic has only increased my desire to continue to challenge myself to become more knowledgeable. I plan to do so by continuing to be an active part of my master’s program and to pick the brains of other successful business minds as I increase my network.

7 thoughts on “Angel Investing: Evaluating

  1. Joseph Rudy says:

    You have some great thoughts on evaluation. I came to a similar conclusion with the people aspect, specifically the entrepreneur, after reading the chapters on evaluation. Without an entrepreneur who has the drive and motivation to succeed, even a company with a “perfect” product will fail.

    You made a good point about the different qualities that an entrepreneur should have. A good way of teasing these qualities out is to arrange meetings or have interactions with that entrepreneur in various situations. Obviously, you would have to invest a substantial amount of time doing this, but it would be worthwhile to consider the investment seriously.
    Great thoughts.

    Joe Rudy

  2. Katherine Pearson says:

    Meeting with the entrepreneur is important. If the relationship doesn’t make since, it will not work. Both investor and entrepreneur need to be on the same page and have the same goals. I think you are right to really focus on the people aspect of evaluating, after all, really they are evaluating the entrepreneur. Great thoughts.

  3. Zach,

    I love that you focused on the personality and traits of the entrepreneur with your post. From my reading of the book, it seems like the hard business skills are to be expected, but it’s the soft skills that will take you further with an angel investor. I’d say the same is probably true on the other side of the agreement. As an entrepreneur, I wouldn’t want to work with any investors if we can’t get along and work hard together. It seems clear that the best investors see themselves as part of the company rather than just pocketbooks.

    Brian G.

  4. Hey Zach,

    I appreciated your post on evaluation and the focus on the people aspect of it. I, too, liked the quote you shared. In my post, I did mention that I saw some B-quality folks that hit home runs, but it was more due to market conditions and being in the right place at the right time. However, I would only ever want to invest with A-quality folks.


  5. Victoria Price says:


    I like how you put special emphasis on the entrepreneur themself in your discussion. The business venture could be a great and very marketable idea, but if the person behind the venture is not motivated, determined, or focused then it has a large potential to fail. Angel investors should definitely evaluate the entrepreneur(s) as well as the business venture and the capabilities they have to present top notch (or not) products or services and take all of it into account when potentially investing.

    Great read,
    Victoria Price

  6. Hey Zach,

    After reviewing the Harvard framework in the evaluating section of “Winning Angels,” it became evident that this is an essential process for investors to ensure they are as efficient as possible with their time and vetting of opportunities. Making sure you are doing business with the right people is imperative. It also goes both ways as far, not just looking at the entrepreneur and their time but also looking at whom the entrepreneur is getting funding from and looking at their track record/history. That’s one thing I enjoy about this book teaches proper investment strategies. Still, an entrepreneur, like most people in this graduate program, can learn a good technique for finding the right investor for their business.


    Stokes Warren

  7. Zach:

    The quote you included in this week’s post regarding A-quality individuals also reminded me that having the right people in the right roles is the foundation for success. Having the correct type of entrepreneur is also crucial – lifestyle entrepreneurs may not be the right fit for an investor looking to maximize a harvesting event. As you say, vetting is a vital duty an investor must take time and resources to properly complete. An entrepreneur’s passion alone won’t produce results; they must be competent as well.


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