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OPINION

Should You Make An Introduction to Your Firm

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

If you are an angel, should you make an introduction to your firm? Angels are people with the net worth based on IRS interpretation to make investments in seed stage companies. However, just because you have the net worth, doesn’t mean you have the skills to be an angel.

Angels not only write checks, but they do a lot of other things for seed stage companies. They create opportunities for them, mentor them, find people for them to network with assist in funding, and might even help them exit.

It’s sort of a big job, and it’s all done for free-unless you manage a fund. Then you get paid to do it, but you aren’t an angel then. You are a fund manager.

When a firm gets hot, lots of people all of a sudden try to find a way through the door. It may be to sell them services. It might be to try and get a job. Perhaps it’s to find a way to invest because the firm is deemed less risky now than it was at the seed stage. Imagine the flood of attention someone like Mark Zuckerberg got in around 2008. He could have been tied up in worthless meetings for months.

The problem is, there is no set rule on introductions.

How do you decide? For me, I try to find out exactly what the person wants from the firm when they want an introduction. You can accomplish this in around five or ten minutes of questioning. The reason you do this is that you don’t want to waste anyone’s time. The worst thing that can happen to you is that you wind up in a physical space with someone and you have to interact when you know it’s going nowhere.

It seems if you have a cup of coffee with a person, it will take an hour. For a start up company, an hour is a precious thing to waste when they could be doing something productive. Keep that in mind.

It also helps to have a good CEO on the start up team. They need to do their part to communicate to angels what they need. If they need financing, or if they would like to be introduced somewhere, they need to tell someone directly and clearly. Then the information can be acted on. If the CEO simply thinks about it, or talks to the wrong person, nothing will get done.

The next thing the CEO has to do is let the angel know a connection has been made, or not made. They need to tell them if it was a good meeting or a dead meeting and just a few statements why. If there are next steps the angel can help with, the CEO needs to direct them.

My personal experience is if you are creating a bona fide customer, introductions are welcomed happily. You are creating value for the firm, and the investors.

Other things become trickier. Introducing potential employees might not be a bad thing, but you need to run all that through the CEO-and maybe a board member. Introduction of potential sources of new capital definitely need to be run by the CEO-and the board member. New capital could have a potentially disastrous effect on existing investors no matter how well meaning you are.

The problem with networking is there is no rule book. Some people are connectors, some super connectors, and some just feel awkward doing it. Great networking works both ways, with networkers getting as much as they are giving. Then there is real value being created.

The only way to get good at it is to do it. Follow your gut.

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