I have recently read a non-fictional book entitled “The Invested Investor”, written by the successful UK-based investor Peter Cowley. I strongly recommend the book to anyone that wishes to learn the basics of angel investing. The author covers the life cycle of an investment, from the first round of investment (seeding) until the startup closes shop (most frequent case), is turned into an operational medium-sized business (sometimes) or is acquired by a big player (rarely).
Most of concepts explained throughout the book are related to the art of investing: funding, valuation, venture capital, options, shares, CLV/CCA ratio, etc. However, some other concepts are also applied in the project management arena. In fact, the author claimed that an invested investor must have good project management skills in order to succeed. I selected and described below the top three concepts that are shared in both disciplines.
Everything starts with the Team. Without a team, there is no startup and there is no project. But not any team will do the job. The features that a project manager or an investor look in their teams are actually the same: passion, drive, knowledge, willingness to learn and listen, transparency, honesty and ability to inspire. In other words, whether is developing a new phone app in a startup that has not reached breakeven or carrying out multimillion dollar projects to transform a city landscape, goals will not be met unless there is a strong and committed team behind them.
Pivot is when a company changes direction and its fundamental offering because the original business model is not working. Pivots are expensive and difficult because they usually carry along more investments and a modified vision. It is important to note than pivoting is not a sign of failure. In fact, most businesses pivot on their way to optimizing the model. Pivoting can also occur – and actually quite often – during a project’s life cycle. At the end of the day, project management enables the translation of a company’s vision into reality. A change in environmental factors or regulations, a shift in consumers’ habits, the release of a novel competing technology… all of these are factors that could pivot the project. Pivoting is carried out by modifying project’s triple constraint – more funding, extended/modified scope, additional resources and/or time – or by killing it straight up. The same concept could be extrapolated to program and portfolio levels, where pivoting the company strategy will inevitably pivot the value stream represented by its portfolio of projects.
Writing cheques is not something that can be done lightly. Funds are transferred from the angel’s account to another account without the certainty that it will ever produce a return. Before the money is kissed goodbye, two documents are set in place; the term sheet which is a mostly non-binding document that sets out the deal to be completed between investors and founders. And the shareholders’ agreement, which is a legally binding document signed by the investors and founders defining how ownership of the company is distributed between the parties. This gated approach resembles the two gates typically found in the initiation and planning phases of a given project. In this manner, the term sheet is equivalent to the project charter – with the difference that the latter is binding – and the shareholders’ agreement is comparable to the project plan.
The skill set of a Project Manager must include the ability to negotiate. Negotiations are the means by which parties can resolve conflicts and thereby arrive at a mutual satisfactory solution. The problem is that often project stakeholders engage in positional bargaining, a negotiation strategy that involves holding onto a fixed idea or position regardless of any underlying interests. In fact, arguing over positions turns out to be inefficient, relationship endangering and might lead to unwise agreements.
An alternative to this is called Principled negotiation. This name was given to the interest-based approach to negotiation set out in the best-known conflict resolution book, Getting to Yes, first published in 1981 by Roger Fisher and William Ury and advocates four fundamental principles of negotiation.
Every negotiator has interest in both the substance and the relationship. Often the relationship becomes entangled with the problem. Thus, it is imperative to separate the relationship from the substance in order to kick off an effective negotiation.
Quite self-explaining. The identification and discussion of interests is a wise manner to route the negotiation towards a conciliation of interests and not positions.
Instead of forming a premature judgement of the ideas thrown during a negotiation it is best to ensure an understanding between inventing and deciding. Also, instead of searching for a single answer try to broaden the options (a circle chart can be useful for this purpose). And instead of thinking that “solving their problem is their problem” create an environment that enables making decisions relaxed.
In negotiating to purchase a particular car, we would want to look at what that car sells for at other dealerships. The objective criteria are nothing less and nothing more than factual pieces of information, independent of the parties in the negotiation, that are relevant to what should or should not be agreed to in that negotiation. Principled negotiation produces wise agreements amicably and efficiently.
Principled Negotiation is further enhanced by applying the eight following pillars of negotiable wisdom: