Paul has asked me to speak next week at the Provo Labs Academy for entrepreneurs. I’m going to chat briefly about “Becoming Angel Ready.” If you are a member of PLA (or are planning to come on Tuesday), I’d be happy to prepare responses to any specific questions that you have about angel investing.
Feel free to leave your questions here.
I wish I had more time to read blogs. Some people don’t get the point of reading blogs and may think that it is a waste of time; I, on the other hand, love the learning opportunity it provides. I like to learn what others have learned and apply the lessons to my current projects.
I use Google Reader to keep track of all my RSS feeds from other bloggers. Because I don’t have a whole lot of time to read them all, here are the ones that I read when I only have a few minutes:
Of course, I also have Jeff, Trent, Money, Josh, Barson, Michael, Chad, and a bunch of other blogs that get their fair share too.
What blogs am I missing? Which ones are at the top of your list and why? What makes a good blogger?
Bill Reichert, one of the partners at Garage Technology Ventures (yes, partners with Guy Kawasaki) has written a very good article on “Pitching to Investors.” Not only does he talk about the content that you should include in your slide, he also gives valuable tips on the delivery of your presentation.
From all of the pitches we have seen at our SpeedPitching events, I’d have to say that he is very accurate. There really is an art to pitching to an investor and I would make sure to prepare yourself well before your meeting.
Speaking of SpeedPitching events, we had one in Utah a few weeks ago. The companies that presented were some of the best I’ve seen. Here’s a list:
Because of the demand from investors (and the fact that the quality of deals is constantly increasing), we have decided to host our events every other month in 2007 (in Utah). If you want to read blog posts from others about the speedpitching events, you can go here, here, or here.
There are 2 things that investors always want to know when looking at your company:
Of course, every company has competitors. Don’t be a naive entrepreneur by stating that you don’t have any competition. Whether it be direct competition or indirect competition, there must be a way that your customers are currently fulfilling that need. Also, having competition validates your space for sophisticated investors.
Once you have accurately identified your competition and their strengths & weaknesses, now it is your job to boast your competitive advantages. Do you have unique access to resources that your competition does not have? Here are a few examples of appealing competitive advantages:
(There are many more, but that starts to give you an idea)
Grow Utah Ventures, with partnership of Lumin Publishing, has recently released a new Entrepreneurial eMagazine called LAUNCH. This is a magazine for entrepreneurs by entrepreneurs. Our team at FundingUniverse will have the opportunity to participate on the editorial board to help decide the content of each issue.
So the idea behind the magazine is to have edgy entrepreneurial content written by the “non-typical” suspects (not the usual names that you see everywhere). We are also trying to cover non-typical stories. For example: What’s the latest in the entrepreneurial community? Who’s doing what? What controversies are out there? Who is an up and coming entrepreneur that should be highlighted? Who would you like to hear from?
I’d love to get your feedback. What’s in it for you? It’s highly likely that your suggestions will be included in future editions of the magazine.
We’re looking to add a couple of sales ninjas to the FundingUniverse team. Jeff has more info on his blog. Check it out.
Another way to show you can execute is to surround yourself with talent. If an experienced professional steps up to join your management team or advisory board, it communicates to investors that you are building something valuable.
It is also appealing to get an investor on board who has significant industry experience. In many cases, his/her presence alone will validate the investment opportunity for future investors.
This concept is especially important when you are a first-time entrepreneur. If you don’t have much experience, compliment your passion & energy with experience and expertise by adding them to your management team and/or advisory board.
One of the most compelling parts of your fundraising pitch will be to show you have generated substantial revenues. Investors want to determine if the “dog will eat the dog food.” In other words, will customers buy this product at a high enough price to create a profitable company?
Boasting substantial revenues is important because it tells the following story:
• You already have a product/service in the market. As explained in #3, most investors prefer not to invest in a company until the product development is sufficiently advanced where the product or a prototype of the product has been shown to customers. (Of course, there are some exceptions.)
• You are focused on sales & marketing. Entrepreneurs often understand products, technology or finance, but have little understanding of sales and marketing. Investors want to know entrepreneurs understand the importance of sales and marketing and have management team members focused on making sure customers get what they want.
Just think, it may be that you don’t have to raise any money because your sales revenue is sufficient to fund your growth!
Yesterday, I had the opportunity to participate in the semi-annual Weber State University Entrepreneurs Association advisory board meeting. Though the association is still in its infancy, I’m anxious to see what comes out of this small group of very motivated entrepreneurs. One thing’s for sure, they are starting out on the right foot by getting a strong advisory board (including Greg Warnock, Alan Hall, Alex Lawrence, Tony Allred, Jerry Ropelato, etc.) and getting the support of successful entrepreneurs in the community.
Anyway… back to yesterday… the main discussion of the meeting was trying to figure out how to provide strong entrepreneurial experiences for the students that would result in more members joining the association. In our last meeting, a lot of the discussion was centered around the possibility of raising a student-run venture fund. The plans turned 180 degrees yesterday when Greg Warnock talked about the difference of analyzing a business to invest and actually building a business yourself. While it is valuable to know how to analyze an investment opportunity, it is not the same as getting your hands dirty trying to build the business.
The timing of the discussion was impeccable; the night before, I read an interesting blog post from Guy Kawasaki that talked about this same concept. Here is a quote from Guy in summary:
“Venture capital is something to do at the end of your career, not the beginning. It should be your last job, not your first.”
While it would be fun and exciting for the students in the WEA to run a student venture fund, I think that the right decision was made yesterday and it will largely benefit of all those involved. What us young entrepreneurs need (including the students and me) is valuable entrepreneurial experience building successful companies — not valuable experience looking at other companies from the outside.
If you get a chance, read Guy’s blog about young VCs. I’d love to get your comments on the subject.
Brock Blake, CEO of FundingUniverse.com and serial entrepreneur, blogs about the latest in angel investing and entrepreneurship.
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