Monergy
Most entrepreneurs when they pitch think that all they are asking for is money. Sometimes when they are recruiting people to join the team, they may only be thinking about acquiring talent. Sometimes what companies really need is Monergy. That is Money and Energy (directed and talented energy).
One of my bugbears (I have so many) is that entrepreneurs are often not clear about what they are after. The reason why this is important is that angels are often wrongly accused of putting in ‘dumb money’. That is they write a cheque and that is the end of their involvement.
My counter-argument is that on many occasions, angels ‘helping’ are seen as interfering angels. And when I invest as an angel, I am backing the management team. If the company wants my help (and sadly for my ego, very few companies do ask for my help) they assume that this help would be available for free. Of course I want companies I have invested in to do well, but there is a cost to time. The best way to overcome this is to agree a different valuation for monergy and for just money.
For example, I have invested in three companies in Halifax recently, one of them www.curingresin.com needed no help from me at all. It was an easy straightforward investment (money only). Another company www.shotloc.com needed a combination of money and energy (Monergy), so we agreed a combination of a straightforward investment (along with other investors) and some options in the business (so that if the company benefits from my input, I am able to share some of the uplift in value).
Finally, one company needed much more time and effort than money, so in that instance it was a straightforward options package. When the company does get to the stage where they do need straightforward investment, I may decide to invest (with no bearing on my existing options package).
I guess the point here is that entrepreneurs should be clear about what their ask is. As an aside, I was talking to a very close friend of mine from the other side of the pond. The ‘criticism’ he faces from people he works with is he would be so much more effective if he would just focus on a few things. The common denominator these critics have is that the projects they wish him to focus on is always their own – and further more they do not want to pay him for that focus!
Be clear about your ask, if it is Monergy, that’s good but allow that to reflected in the valuation.
