Angel Capital Group’s Eric Dobson On Why Entrepreneurs Do What We Do

background test - Copy

Download | Subscribe

We covered so much ground with Eric Dobson that we had to break it into two episodes. Listen to Part 1 first and then jump into this one.

Here’s a quick rundown of the topics we cover in the interview:

Specifically regarding working with investors, Eric tells us:

  • what to expect as a realistic time line to getting funded from pitch to check,
  • how important it is for founders to have skin in the game, and
  • whether or not to ask for money capital than you need.

4 Tips to Attract Angel Investment in 2014

EEHeadline

Le Meridien Munich—Business meeting

Starting a new company from the ground floor is never easy; even seasoned entrepreneurs have been known to stumble along the way. First-time entrepreneurs have one brief chance to make a big impression on investors, and unfortunately more often than not they will fail. Following are four tips for early stage entrepreneurs hoping to prove to investors theirs is an idea worth opening their wallets for this year.

Think Like an Investor

Just like the first rule of public speaking – know your audience. Entrepreneurs who do not pay enough attention to understanding what investors are looking for will most likely fail to engage their audience. First-time entrepreneurs often spend too much time emphasizing their product or service during a pitch and as a result forget to answer some very key questions – the relevant experience of your management team, the go-to market strategy, the competitive landscape and potential for acquisition, just to name a few. Investors respond best to a balanced emotional and analytical appeal; think about it, would you rather have someone read you an almanac or tell you an exciting narrative based on the facts that almanac contains?

Choose Three Takeaways

If there is a lot of information to convey in a limited amount of time, abide by the rule of three. Before you step foot in the meeting, decide on the three most important takeaways prospective investors should leave the presentation with. Then, whether it’s placing an easel at the front of the room with the three takeaways listed or bringing them up several times throughout your presentation, let investors know from the beginning of your pitch that if they remember nothing else from your presentation, they should remember these three items.

Think Big

One of the biggest mistakes early stage entrepreneurs make is not thinking big enough. Investors need to know how you plan to reach a large market with a sustainable competitive advantage. The most profitable ventures are able to scale quickly and efficiently; entrepreneurs who secure funding are the ones who were able to communicate how they anticipate and plan for challenges they will likely face throughout the growth of the venture. There is considerably less risk for investors, who remember are looking for a big return, if your market is enormous. An enormous market means a venture does not have to capture an unrealistically high market share to  command an exit value that will enable investors to meet their return requirements ; a small market means a potentially smaller exit event that could fall short of an investor’s needs or expectations. Showing investors that you have a realistic plan to quickly scale and grow within a large market oftentimes means the difference between attracting their money (or not.)

Make Realistic (and Defensible) Financial Projections

With so many sky-high valuations making headlines in 2013, it is easy to see why early stage entrepreneurs might be tempted to overestimate the value of their idea. Doing so, however, can seriously limit the longevity of your venture and ability to secure increased funding during subsequent rounds. It is also easy to price yourself out of the market if investors are turned off by the unreasonable value you place on the venture– in this scenario you do not even get the first round of funding let alone the opportunity for future investment. Do your homework. Take advantage of online tools like Worthworm, seek the advice of mentors, and ensure you walk into a meeting with a defensible and credible value and financial projections.

It is undoubtedly an exciting time to be a first-time entrepreneur as the public continues to embrace innovative ideas in so many diverse industries. However, even the greatest ideas can fail to take off if the money dries up. As you seek to attract angel investment this year, consider these four tips as you prepare for that critical first meeting where making the right impression is more important than making a big impression.

Alan Lobock is the co-founder of Worthworm (www.worthworm.com) and SkyMall. Having been on both sides of the start-up investment scene– seeking investment for his ventures and as an angel investor himself, Alan launched Worthworm to solve one of the biggest challenges young companies and their prospective investors face—how to compute a credible and defensible PMV for an early stage venture seeking angel investment.

EETNBannerAd1

AustinPreneur and Angel Investor Jason Cohen On Deal Flow [video][sxsw]

Jason Cohen, WPengine,Austin startup,angel investor,startup,sxsw,sxswiOn Friday at SXSW Jason Cohen the founder of WPengine, AustinPreneur and Angel investor sat on a panel with other local Texas angels to talk about angel investing. The standing room only crowd was made up of people who want to be angel investor and of course startup founders who want the inside track on what angel investors look for.

Cohen has invested in several companies and prefers a hands on approach. In the video below he says you can treat angel investing like a numbers game. The more deals you get into, you could sit back and relax and probably see some results. But what Cohen, and good angels do, is help cultivate the companies and the founders.

Angel investing can be a heavy gamble, but with the right angel investors, who are actually interested in helping the startup become successful, there’s a better chance of survival. When an angel investor invests their time and mentoring, even if the first deal is a bust, that founder or that team may have another idea that ends up being “the big one”

Cohen also warns that good angel investors need to have an investment thesis. They need to create a plan for their investment strategy that aligns with the things they know and where the investor can understand the deal, the idea, the team and the potential. Investors should then target deals that fit directly into that thesis.

Angel investors shouldn’t be looking for the get rich quick ticket. “The really hot ones go fast and they’re invisible” Cohen told the audience. He likens that to real estate in Austin and San Francisco. If you want prime real estate you’re buying it from someone already in it.

Check out Cohen’s remarks on video below:

Jason Cohen talks about the value of AngelList in this video from SXSW

Minnesota Venture Firm Tells Startups: Stop Reading TechCrunch

TechCrunch,PandoDaily,VentureBeat,Arrington,Stop Reading TechCrunchFour business partners with roots in Minnesota, came together earlier this summer and announced the formation of a new venture firm called AMP Partners. Minnesota has seen a recent boost in startups and entrepreneurism spearheaded by JumpStart Inc and then quickly taken over by Minnesotans.

Darren Marhula, Brad England, Mark Donahoe and Chris Palm pooled their own money together from investment banking, Wall Street, and property management, Marhula told tech.mn in June.  “We’re interested in the right entrepreneur with the right plan more than the exact market.  We’re not exclusively focused on any one type of business, but definitely interested in local technology startups.”

Now as the summer season comes to a close and AMP’s been on the ground running for the last few months or so tech.mn checked back in with Marhula who echoed a main theme that we continually hear on our sneaker-strapped nationwide startup roadtrip. That theme, simply put is, valuations are too high.

In the follow-up interview Marhula said “we continue to be surprised by the unrealistically high valuation expectations by many entrepreneurs out there, which has prevented us from making more investments.”. So again in line with markets their size like St.Louis, Cincinnati and even Washington DC, entrepreneurs are pricing themselves out of an investment. This can be a lethally hard lesson to learn.

To date, AMP has invested into two companies, presumably with more modest self-worth. HomeVisor is an online Realtor referral service and the first to receive funding from AMP. Their second investment , BuyWafers.com sells silicon wafers and other materials for semi-conductors.  That company will be launching shortly. AMP didn’t reveal how much money was in either deal.

It’s evident that AMP, like most investors, are looking for viable startups and businesses and they’re not holding a business plan competition. AMP is also seeing a lot of buzzword happy entrepreneurs who are the same entrepreneurs being poked fun at by Vooza in New York.

Marhula said: “Stop reading TechCrunch and focus on building your business; get your valuation expectations in check and when you come in to pitch your idea, we don’t want to hear about exits, pivots, and MVPs…we want to see results.”

AMP Partners would love to hear your realistic pitch, drop them a line here

Linkage:

Source: tech.mn

Check out AMP here

Nibletz is the voice of startups “everywhere else”