The Angel Investor in the Startup’s Ecosystem

05.01.2019   |  Startup

“Angel investor” is one of the best names in the business literature. Maybe, too good a name, to the extent that startups tend to perceive this category of investors as a solution to all problems, which is not. That is why I’ve tried to place it in two ecosystems. You’ll find out what an angel investor may and, especially, may not be. 

The Money Ecosystem

The first ecosystem is time-related and refers to the capitalization cycles of a startup. Briefly, an angel investor turns up, as financer, sometime after the founders, but before the capital that demands a completely quantifiable and repeatable Return on Investment. Using bullet points, the ecosystem looks like this:

  • Founders: Naturally, they are the ones who start the business, but from the point of view of the resources invested, the contribution in capital is small and this is compensated by work and ideas.
  • Angel Investor: It comes after the founders phase and takes a high degree of risk in exchange for a (minority) part of the business, which will be monetized only in case of success and only after a number of years.
  • Venture Capital: As different from the Angel Investor, it is an institutional form of financing, even if it includes taking risks for remote benefits. A Venture Capitalist will bring about financing from third parties, as compared to the Angel Investor, which risks their own money.
  • Mergers & Acquisitions/IPO:  In the exit phase (Mergers & Acquisitions) and/or during the phase of listing on the stock exchange (IPO – Initial Public Offering), the startup is on the brink of maturity, in the sense of a long term predictable profitability. The more available money, the stricter the financing conditions.

Ecosystem of the Organizations and People

If the money ecosystem is time-related, the organizational one refers rather to a definite moment at the beginning of the evolution of a startup. From this point of view, the Angel Investor lives together with the founder among the following organizations and communities:

  • Incubators: (Profit or non-profit) organizations that ensure business trainings and work spaces for startups. Most frequently, they are governmental programs and financing.
  • Accelerators: These are similar to incubators, but are mainly focused on the growth process of a startup, than on facilities. In the USA, these are rather private than governmental, the same as in the case of incubators.
  • Other types of mentors/consultants: Together with the Angel Investors, founders also work together with other experience holders, such as mentors (pro bono or financed by third party organizations) or consultants (which work for a definite fee).
  • Communication/networking facilities: To more or less formal trade shows and clubs, you can add Web 2.0, groups ranging from specialized blogs to LinkedIn and other types of presence on social media.

As for financing, a successful entrepreneur will know to look for the appropriate kind of resources which match the growth moment of the business. As for people and organizations, a successful entrepreneur will be able to keep their eyes on the various opportunities available, irrespective of how much they would focus at a certain time on one of them.

Octavian Pătrașcu  |   05.01.2019   |  Startup

Three things to test and maintain in HR: hard skills, soft skills, and motivation

25.04.2019   |  News  |  Startup
The quality and efficiency of an employee mainly depend on their professional qualifications, but the modern human resources theory refers to this only through a partial term, namely "hard skills". In terms of evaluations and professional management, these “hard skills” are supplemented by a range of different qualities defined as "soft skills", such as the motivation that an individual demonstrates or chooses to develop.

Hard Skills: Easy to identify, necessary, but not enough

The term "hard skills" applies especially to fundamental professional knowledge, skills, and abilities, but not only. For example, if a programmer has to write code in Java, he will obviously have to know the programming language. In the field of hard skills, however, complementary skills such as foreign languages ​​or driving licenses also come into play. If the job description is not IT-related, the computer skills - quasi-generalized today - are also in the same complementary category. Upon hiring, hard skills can be easily tested or proven. Basically, all the skills in this category can be certified through a diploma or a certificate of qualification. These skills are the basis for the future work of the employee, but in the vast majority of cases, they are not enough to ensure good performance at the workplace.

Soft Skills: harder to test, especially required for higher positions

These are somewhat social qualities, relating especially to people-interacting abilities. Soft skills include teamwork skills, communication skills, leadership qualities, and the ability to solve problems as they come. From simple politeness to a nonconflictual attitude, a whole range of attributes can be added here, including good time management or the desire to conform to strict professional ethics. If hard skills are easy to identify, in the case of soft skills, the stereotype enumerations present in CVs are never enough proof of their existence. They can somehow be felt when hiring, during their interview or, possibly, through psychological tests set up by human resources specialists. As they mostly focus on human interaction, soft skills are increasingly needed as the position of the employee in the hierarchy is higher, but the situation differs from one job description to another. If the programmer we had as an example earlier does not necessarily need soft skills when writing code, a sales or marketing specialist will interact with the top management and thus cannot work without them.

Motivation: differs from case to case

Motivation is a problem that concerned psychologists way before Maslow's Human Pyramid of Needs. There are many hypotheses and models that relate to this theory. I will just state that a first classification refers to financial and extra-financial motivations. The former refers to material compensation and are accepted unanimously. However, since the beginning of the 20th century, it has become clear that there is no direct link between payment and the efficiency of a person. 100 years ago, however, besides the famous $5-a-day salary, Henry Ford offered land lots, kindergartens for their children and, in the case of immigrants, English courses to help them integrate into the mass production processes. Today, large companies provide health insurance, relaxation areas, various educational classes, physical activity facilities. All of these include career plans and contract terms that offer job security and much more. Perhaps, the first thing to remember is that motivation differs greatly from one employee to another. Effective management should be as flexible as possible, in accordance with the needs and incentives of employees, beyond the standard packages.

The Employer’s Perspective

From what we described above it seems that that the employer will consider the three components as we’ve structured them. Hard skills are easy to identify and absolutely necessary to ensure performance in a particular position, so these are the first ones that will be tested. Soft skills can be identified to a certain extent in the midst of the employment process, but initial perceptions can be confirmed or denied later on. What’s more important is sustaining them at the workplace, often as a necessity for promotion on a higher hierarchy level. As final words, motivation has qualitative rather than quantitative aspects. Employers should be less concerned about the answer to the question "how motivated is an employee?", but rather show concern towards the type of motivation that employees are most responsive to. Schematically speaking, if hard skills are mainly the employee's concern, soft skills relate to a process that takes place between the employee and the company, and in the case of motivation, it should meet the needs of the employee. Only by paying attention to all the three components, the employer and the employee can have a mutually satisfactory and productive relationship.
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