Early Stage Investors Are Angels, Not Sharks

By Marianne Hudson
Monday, 2nd March 2015
Filed under: Year2015, Entrepreneur

This month Marianne Hudson, angel investor and Angel Capital Association (ACA) Executive Director published a great article about early stage investors being angels as opposed to sharks and dragons, as is sometimes portrayed on TV.  Shark Tank is an American reality competition television series based on the international Dragons' Den format and Hudson says “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.”

The following piece appeared on the ACA website and has been reprinted with permission.

The reality how “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 manoeuvring 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 outmanoeuvre 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 benefited 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 organisation directory, Investor IQ, Webinars, and events.

Serving as the voice of the North American angel community, the Angel Capital Association website features Angel Insights Blog, with commentary on startup investment trends, the latest on public policy affecting entrepreneurial investment, and other topics top of mind to active accredited investors.