Early-Stage Investors Are Angels, Not Sharks

By: Marianne Hudson, ACA Executive Director

The reality show “Shark Tank” has become one of the most popular programs on television and has helped the wider public hear the term “angel investor” and grasp what they do.  And likely the Sharks have invested in and coached many entrepreneurs, helping those companies become successful.

But I really liked a news article last week - “Dallas Health Startup Investors Are Angels, Not Sharks” - because it distinguished many angel investors from the maneuvering and other drama that happens on the TV show.  In my opinion, the article nailed it:

“On television, entrepreneurs who need money enter the Shark Tank.  In real life, they turn to angels.

Like Mark Cuban and his fellow sharks on the popular television show, angel investors hear pitches from budding business owners hoping to create the next big thing.  But unlike TV’s sharks, these local financiers don’t try to outmaneuver each other to snag the best deal.  Instead, they put their heads together to discover the best opportunity.

In Dallas and Fort Worth, angel investors are pumping millions of dollars into a bevy of startups, from an Austin drug company developing a treatment for MRSA to a Fort Worth company whose technology was recently used to disinfect apartments against Ebola.

It’s local money backing local innovation…”

I am glad Shark Tank exists because the show has really helped lots of people understand and get excited about early-stage investing and being an entrepreneur.  Heck, my Mom, finally (sort of) understands what I do – and I can tell Angel Capital Association members how many more Congressional offices have at least heard of angels when we meet with them.  This really helps in promoting public policy that might support our ecosystem.

It is also great to see articles about entrepreneurs who truly benefitted from being involved in the show.  This article shows how a Seattle-based entrepreneur got an investment offer, but even more got excellent mentoring from an original shark to take his business to the next level.

The activities of most experienced angels might not make for exciting television, but they make huge differences for entrepreneurs and our communities with their combination of money and expertise.  Not only that, but they collaborate with other investors and the entrepreneurs to bring the needed capital together with deal terms aimed at making all involved successful.  Smart angels definitely need to challenge entrepreneurs with good questions as they vet their ideas, but they do so in a gracious and respectful way.

If Shark Tank has inspired you to become an angel, I encourage you to look into the “real” world of angel investing and learn all you can from angel investors close to you.  Angels and many resources exist to help you learn best practices and processes for angel investing.  This can help you be successful and have lots of fun at the same time.  I invite you to check out the Angel Capital Association’s resources, such as our member organization directory, Investor IQ, Webinars, and events.