Post-investment Monitoring and Value Addition

In this chapter, we study the importance of investors adding value to their portfolio companies, and the factors that dictate the level of their involvement in a business. The key value-adding roles played by the angel investors and the right approach for angels to support their investee companies would be discussed. Primary reasons for value add by angel investors are their own motivation to support the company, reduce the risk of their investment, and ultimately maximize the return on their investment. Key value-adding roles played by angel investors are—monitoring and supervision, sounding board and strategic role, resource acquisition role, and mentoring. If done right, value additions by angel investors can provide significant support to a founder, whereas overindulgence may even become destructive for the business.