Where We're At: We've realized that a typical VC may not be what we need - because our funding needs are in the $50K - $100K realm, and most Ventures tend to focus on the $250K+ arena. That being said, keep in mind that those figures apply to "traditional" ventures, not those that focus on internet start ups, seeing thathe cost of entry into the internet marketplace is SIGNIFICANTLY lower. So while we're of course not turned off by the idea of Ventures, we think Angels are more our speed.
No, not the ones with the glory music, the halos, white robes and wings. The ones with business experience, deep pockets ($$$), a whole lot faith and an equally large following of "believers" hoping to pique their interest. So how do we attract angels? Pray? Umm..no. And what are angels hoping to see as they decide whether or not to pursuit an idea?
Is it just an idea? Is it an idea + some progress? Is it significant accomplishments? Or how about taking your concept as FAR as you can before you request their assistance? What do VCs and Angels REALLY want to see?
We don't know. Yet. But we're working on it.
:::or just maybe trying to figure out exactly what VCs/Angels want and pursuing these assumptions IS the problem:::
To be continued.
Now Playing: DJ Shadow - Backstage Girl (The Outsider)
Lets not discuss Shadow's new album. :(
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5 comments:
Just a short list:
Big markets
First Mover Advantage
A Great Idea
Sustainable Revenue Streams
Great Management Team
Well Written, Attractive Business Plan
Ability To Add New Services & Revenue Streams
Existing Strategic Alliances & Partnerships
Ability Of VC To Partner With Incumbent Management
Speed At Which You Can Execute
Marketing Strategy; Ability To Build Brand
Who Are The Competitors? What differentiates you?
Founder’s Willingness To Give Up Control <~~Most stringent
Founder’s Willingness To “Risk Everything” Personally
I would focous towards a Angel Investor, unless you want to get burned then take the (VC) route.
Take care girls,
_
A short list eh?
In the grand scheme of things, I'm wondering how much any of THAT matters, if lets say, you've already got a company and a product and its public and you're generating X number of interest and Y number of sales a month (even if its VERY meager). Do they still care about your business plan, Idea, Speed at which you can execute etc? You've proven those things to be successful already.
Which again leads to: which approach is better - formulate articulately and go try and sell the IDEA or go to market and do and show them what you've SOLD?
For serious Venture Capital, the answer is both. You need to have shown some traction, unless you are an entrepreneur that has already given them a 10X return in the past few years (in which case they'll pretty much throw money at whatever you dream up). You also need to demonstrate that your idea can scale into something interesting for them (rule of thumb is $50M in 5 years), as well as meet their other guidelines (most of which Jason listed).
Understand that VCs get 100s of plans daily from people with no experience and very little chances of success, so they stick with what they know (particularly who they know). How do you break in? Find a partner who's been there before, or have major academic and/or big business credentials to validate your expertise.
VCs are definitely not what you're looking for, but angels can be even harder sells (in my area at least). Still, SoCal is supposed to have a pretty affluent crowd, so there should be someone(s) out there who believe in what you're doing. But it will be more likely they'll pay attention if you're already live (and generating revenue).
In your experience eh? You've opened the door, so now I have to ask - what is your experience?
You offer a lot of great information - clue us in to how you learned. :)
good question.
please find http://www.youngentrepreneur.com/forum/showthread.php?t=7245
what you need to do is scroll down to find links to a number of pdf documents
these are scientific papers which explore what angels expect and what motivates them
two points to remember:
1) angels expectations are best understood in the way they are different to vc and bank expectations
2) expectations are dynamic. they change depending on the behavioural finance concept of "framing"
what you need to do is to frame facts in a way that shapes investor expectations
yes - you can, and you must manipulate what investors expect - or they'll expect the impossible
i.e. the shopping list that jason mentioned
http://en.wikipedia.org/wiki/Behavioral_finance
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