Remember the Angel Kings' four must have personality factors, or otherwise called our "PASS" formula:
1. Passionate, but with a purpose.
2. All-in to their endeavor.
3. Shows no fear of failure.
4. Surrounded by equals or those greater.
In this article, we will be discussing #2 of our formula.
The All-in mentality
All passionate and purposeful founders or inventors must be asked whether or not it’s their full–time venture or just an idea they’re pondering perfunctorily. Why? If it’s not their full–time, all–in moment, don’t bother writing a check. Not one of the top 10 billionaires in the world ever took on an idea, product or service part–time.
For Musk, his all–in mentality has driven him to a level of obsessive compulsiveness that one could blame for a divorce and much strife within his own life. Musk was all–in to PayPal – and to every venture he pursued. Musk worked day and night, and in fact, slept in the office and shared a tiny apartment to save on expenses. Musk would do everything he could to make sure that his company succeeded.
Normatively, is this good or bad? Who knows… your job as an angel investor is to find the best founders who can bring you a massive return on your angel investment. No, we don’t want, wish or hope for any of our founders to suffer personal strife or deal with major pains, but look to none other than Steve Jobs to know it can happen to the best.
When we say all–in, just like in poker we want you to treat any investment – $25,000 up to $10,000,000, which we’ve seen at Angel Kings – as possibly your only startup investment. A founder expecting you to write a check should be just as committed, if not more so, to building her product as you are in giving precious dollars to help her fulfill her vision. She has to understand that receiving your check does not mean the work gets easier. If anything, she has to become so hyper–focused in making her vision succeed that her level of commitment to both your investment and her vision becomes a bit daunting.
The all–in mentality is a two–sided coin for both investors like yourself and founders.
On the one hand, you need to be willing to go all–in and have enough of a meaningful investment for it to hurt if the startup doesn’t succeed. As Mark Cuban says, you need to have enough “skin in the game” to care about whether the startup succeeds or fails.
On the other hand, the founder should be willing to play her cards right, not be distracted by different commitments, and remain fully committed to making your investment profitable. If a founder is hedging her bets by thinking that “if this doesn’t work out, we can always do something else,” then it’s not going to work. There’s a limited amount of time during which your startup investment should take off, and the founder can’t squander that time bouncing around ideas and splitting her time between different companies. The all–in mentality requires focus, decisiveness and cooperation between the founder and the investor.
As an investor, you have to be discerning about the founders of your startup investments. Although a founder may have a great idea and is brimming with passion, she must be able to shoulder the level of risk that your investment carries. Just as in poker, the founder must play every hand as if it were her last hand to play. For every hand dealt – whether pocket Aces or deuce–seven – a founder must be all–in as though her life is on the line. Even when tired, exhausted and ready to give up because she feels like nothing is going right, the best founder always gets up quickly before the self–pity worms its way in. There is a level of tenacity, shrewdness and optimism that a founder must possess in order to make sure her vision succeeds.
For the investors…
As an investor, your big moment could come at any time. Again and again, you’ll be pitched on ideas, products and services that will be the next “big thing.” You have to know when and how much you should bet to get a fruitful return, one in which you’re not just in the money but you’re the grand winner … Yes, it’s possible.
For the founders…
View every hand you’re dealt as if it’s your last. Look at an investment as your ticket. You will never be dealt pocket Aces every hand. You’re likely to be dealt just as many terrible cards as the next guy. In fact, you should be happy to even be sitting at the table instead of working a boring job!
If you’re distracted or not fully committed to each hand, you will fail.
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Ross Blankenship is an expert on startup funding, angel investing and venture capital.
Ross Blankenship is also the Founder and CEO of AngelKings.com. Angel Kings is an investing platform that provides accredited angel investors the opportunity to invest in top startups and companies in sectors like cyber security, biotech, mobile, data and financial services. Angel Kings provides both venture capital funds for startup investing as well as private equity funding for early and middle-stage investments.