What does it take to be an Angel Investor?

This is often a tough question to answer. To the SEC, it means that you are an accredited investor and To the man (or woman) on the street, a minimum qualification would seem to be an interest and ability to invest in early stage ventures. However, that is not always the case as there is no qualification to set out your shingle as an angel investor or form an angel group. I often wonder if saying you are an angel investor is the 21st century version of being a consultant in the early 1990's after the corporate layoffs, a euphemism for someone without a real job.

I attended the ACA Summit in San Diego earlier this month. I ran into a friend who was wearing a nametag from another angel group and I inquired as to why she had never shown an interest in joining Sand Hill Angels. Her response was that we required our members to make investments and the other group didn't....Silly us, with that kind of a requirement. I think this sentiment has given angel groups a bad name. An entrepreneur will pitch their business plan to what they think is a group of angel investors and will get a number of follow-up calls afterwards, but they are pitches for services not investment interest.

The ACA is an interesting organization and is providing support in a number of ways to its member angel groups, from public policy, networking, sydnication, and best practices. The National Venture Capital Association (NVCA) was also represented at the conference and is forging closer links with the ACA. In fact, there are some members of both groups, as a number of angel groups have raised funds (that is an entire discussion that I'll leave for a future post).

Academically challenged

My colleague, Joel West, wrote a blog post yesterday responding to an article in the Financial Times on the looming shortage of b-school faculty. In the post, he raises the age old question of whether business students are better served by traditional academics or those with current, practical business experience. Obviously, you can't just have one or the other...At many b-schools, the faculty with the highest student ratings are rarely the ones with the best record of publishing.

In the post, he mentioned that while he feels I am a lynch pin (Thanks, Joel!) of the entrepreneurship program, I depress the academically qualified ratio. Not immediately grasping the meaning, I assumed that if I'm considered academically unqualified, I must be academically challenged. This sounds like a politically correct term for "stupid". However, when I checked into it, it just means for accreditation purposes, I am "PQ" (professional qualified), not "AQ" (academically qualified).

Thinking back to my b-school experiences at Wharton and UCLA, the best profs I had were a mix of AQ and PQ. However, the academics that were in the group of the best spent a reasonable amount of time in industry and consulting. The lecturers tended to be consistently excellent in the classroom, because they were teaching because they enjoyed it rather than a requirement as tenured or tenure track faculty. The money clearly isn't the driving force!

I have been teaching on a part-time basis for over ten years and enjoy the interaction with students and faculty. However, as an adjunct, I don't have to get involved in any of the politics (and very little of the bureaucracy) of academia. This reminds of a comment from the VP Engineering at one of my start-ups, who is a Brit with a dry sense of humor - "I used to teach at university, but then I realized I didn't like the students". Luckily, that isn't the case for me....