My Angel Investment “Power of Three” Rule

Posted on July 15, 2008 by David Gass 1 Comment

When looking to invest in ANY company, I use a simple tool I call the “power of 3” to determine if the opportunity is right for me.

As a potential seeker of funding and/or an Angel, these basic principles will help you better plan your strategy whether you are looking for funding or deciding if you should fund.

Power Rule 1
PASSION about 80% of all company founders / owners that I have met through my angel investing have this first key ingredient. Upon first meeting with my potential investment, I look, listen and observe the following – open and engaged body language, sparkle and in tenseness in the eyes, power and energy in the voice, an emotional connection to their venture and an evangelist mentality regarding the sales and marketing of their product or service. If they have this, I move to the second rule.

Power Rule 2
FOCUS - in my experience, only about 20% of all company founders / owners have this going for them. This rule is more tactical and measurable than the first, and involves verifying the following – strong, complete, business plan, best of the best loan proposal and most importantly an “all in” attitude towards making their business the best it can be. Once I have verified this rule, I am on to the last and most difficult part of my decision process.

Power Rule 3
TEAM this is by far the toughest measurement of the 3 power rules. Only 5% of ALL deals I look at have this one covered. When digging into this power rule, I must be confident in the following – the leader, the managers, the technicians and the HR plan and structure. Because only five percent of the deals I look at have this item, I sometimes qualify my angel investment prospects by looking at this first.

Hopefully my “power of three” has helped you gain some insight into the mind of an Angel Investor.  Wishing you continued success!

Scott Fritz
Angel Investor