How To Become An Angel Investor, a Conversation With Kathleen Murray

If you want to know how to become an angel investor you need to hear this conversation. I chat with Kathleen Murray, a businesswoman and angel investor who stepped into the world of angel investing on her own, supporting a startup company in the wine industry that she still works alongside today. Interestingly, she isn’t sure she would invest in the company again if she was starting over and you can hear her explanation in our conversation. Kathleen is a person who is very clear about the risks and rewards of angel investing and has a great way of describing the process, including how to get started as an angel. If you’re interested in the possibility of investing in startup companies, Kathleen has a helpful perspective on her own journey that can help you consider all the options, so be sure you listen.

Why would you NOT invest in a company you’ve already invested in, if you could do it over?

In this conversation with Kathleen Murray, an experienced angel investor, I learned how she got started in angel investing through a relationship with a company in the wine industry. In the course of our conversation she said that if she had it to do over again, she isn’t sure she would invest in the company in the first place. Why is that? It has to do with the long-term nature of the investment, the constant infusion of cash that’s been required to keep the company profitable, and the lack of a clear exit strategy for her investment. You can hear all the details on this episode of Capital Gains.

Are angel investments good for income or is all about the exit?

One of the things I was curious about when talking with Kathleen Murray was whether angel investments are typically income producing or if the profitability is typically realized at the end of the investment period. Kathleen was quick to point out that seldom is a startup company able to realize the kind of profits that enables investors to be remunerated in an ongoing manner. The funds that are put into the company are used to make it become profitable, not to enable quick profits - and there is a very clear difference. You can hear Kathleen’s clear and simple way of explaining the role of an angel investor on this episode.

Who should and should not get involved in angel investing?

If you’ve ever wondered whether or not angel investing is for you, my guest Kathleen Murray has some very clear questions she suggests you ask yourself to determine if angel investing is a good fit. Do you have extra income you don’t mind losing if a deal doesn’t work out? Are you excited about business and supporting new businesses? Are you eager to help new entrepreneurs who have great ideas? Are you willing and able to provide counsel, advice, and coaching? These are just some of the questions Kathleen shares so be sure you listen to get the entire list of things she says you should consider.

If you want to become an angel investor you need to go in with your eyes wide open.

Kathleen Murray says that angel investing is not for the faint of heart and not for those who want a passive investment. Angel investing requires a good deal of time - in the beginning stages it's spent going through a thorough due diligence process to ensure the investment is in your best interest, and once the investment is made, walking alongside the company founders helping them think through and navigate the challenges of starting a new business. Kathleen does a great job of outlining the commitment and time it takes to be a truly helpful angel investor on this episode.

Outline of This Episode

[1:02] My introduction of Kathleen Murray of The Executive Forum Angel Investment Group.
[2:10] How Kathleen got into angel investing in the first place - and her first experience investing in a startup company..
[5:00] The 3 main things Kathleen considers when checking out an investment opportunity.
[8:40] Are angel investments good for income or is it all about the exit?
[11:14] Who should and should not get involved in angel investing?
[14:08] How can an investor get involved in an angel investing group?
[16:23] How Kathleen founded The Executive Forum Angel Investing group.
[17:34] The types of Kathleen likes and doesn’t like.
[20:30] The reason Kathleen looks for companies to be addressing a real, lasting pain point.
[24:12] A disappointing experience Kathleen had that you can learn from.
[25:56] The importance of going in with your eyes wide open if you want to become an angel investor.
[27:45] What’s the difference between an angel investor and someone who invests money in a friend’s company?