Give Entrepreneurs 5 Minutes

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Last Updated: November 22, 2010

First Posted: October 14, 2009 by The Venture Hype Team

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do not want 227x300 Give Entrepreneurs 5 Minutes

Credit: Joe Crawford

Angels Rob Hayes of First Round capital, Jeff Clavier, and early Googler-turned-angel Aydin Senkut recently shared their views on the state of angel investing. These angels back consumer Internet companies, with recent activity in personalized medicine and cloud-based ideas. Hayes also highlighted the key to ultimate investment success is the character and history of the founder. Said Hayes, “I look for a kick-ass CEO entrepreneur and a big-ass market — I guess I look for 2 asses.”

What you want might or might not be the same as the 3 investors above. You might be an angel who wants more than the opportunity to make money. Unlike VCs, you aren’t in it just to round out your portfolio. You likely want to see excitement; you want to see new; and you want to see the entrepreneurs.

Every angel is different. And this is the point. As an angel seeking investment opportunities, you want to see proposals from entrepreneurs who understand your likes and dislikes. Entrepreneurs must do their homework and shouldn’t pitch you their enterprise software startup if you have no interest in this market. You want to meet with that idea-holder who walks your walk and talks your talk to make sure objectives and expectations are effectively communicated and aligned down the road. Researching about you and your preferences does require effort. If the entrepreneurs have done their homework, consider giving them 5 minutes. You might be pleasantly surprised.

P.S. Even if an entrepreneur can offer great character, significant history and a winning idea, it still doesn’t guarantee a “yes” from the angel. In fact, entrepreneurs are working against the statistic that angels still reject over 75% of investment proposals before even cracking the cover.

* For series, references are published in the last installment of the series.

Angel Investing, Deal Flow

Mani

Excellent advise to angels. You never know which of the ideas may be the right one – for you – and 5 min is not that much of an investment. It is actually lot of fun.
http://venturehype.com The Hyper Team @ Venture Hype

Thanks – Yep, it'd be a worthwhile 5 minutes IF the entrepreneur has done her homework. Tech angels get annoyed if they're pitched real estate deals (assuming the angels have no interests in real estate).
tongyun

It really makes sense that the angel investor and the entrepreneur fit like a hand and glove. What pitch a software start up company to an angel investor whose experience has been in soft goods like retail clothing? That just wouldn't make any sense. In this situation, the entrepreneur must use laser-like accuracy in knowing who he needs to pitch his product to. Otherwise he is wasting his time and the time of the angel investor.
http://venturehype.com The Hyper Team @ Venture Hype

You’d be surprised by the number of entrepreneurs who blast out “offers” without even trying to find out whether the investors are familiar or interested in the industry. Seasoned angels get annoyed immediately. Angels who invest in such clueless founders are undoubtedly new to the investing game. Not only is the budding investor’s money in danger, the founder will likely suffer the consequences of not doing her homework. Just imagine — she’s selling control and equities of her company to an investor who has no idea what he’s doing.
tongyun

That's a pretty scary combination when neither the entrepreneur nor the angel investor knows what they are doing. I have to wonder how many new angels get into the game and end up losing it all because they haven't done their homework because they are just so excited to get into the game.
http://www.MyOnlineToolbox.com/ Brian Javeline

I think there should be a clear distinction as to “angel”. Are we talking an individual? Are we talking a group of individuals operating as an “angel group”? Are we talking an early stage VC who likes to say they do “angel” investing but rarely really does so? This word has changed dramatically and I think many of them use it too lightly for many different reasons. Any person looking for capital should not just gravitate to the word “angel” since it is almost like looking at software and hearing the words “internet”. I get asked this all the time, and this comes from someone who has raised “angel” money from 5 different people in 3 states and 2 countries to help bring http://www.MyOnlineToolbox.com to market. And by the way, we have won a 2008 Dell Top 10 Innovator Award and a recent 2009 Forbes America's Most Promising Award. Any angels out there interested to further discuss?
http://venturehype.com The Hyper Team @ Venture Hype

It's sad that some new angels got burned in their first angel investment and decided to never do it again. That's why education is essential — read Venture Hype.

Sorry, hard to resist.
http://venturehype.com/be-a-shark-or-an-angel-your-choice/ Be a Shark or an Angel, Your Choice | Venture Hype

[...] investment guidelines and look at the text or video submissions you receive. You can quickly tell who’ve done their homework and followed your criteria. Weed out those who haven’t. No need to put a ridiculous price tag to help make this [...]
antoreen

The last three lines within the ‘P.S.’ are disheartening really. It is hard to digest. If it really happens that ‘before even cracking the cover’ ‘75% of investment proposals’ is rejected by the angels, I am sure, some of the jewel entrepreneurs with exceptional vision and potentiality to perform great tomorrow or day-after tomorrow may unfortunately bite the dust which is a great loss for all who are in the arena.
http://venturehype.com The Hyper Team @ Venture Hype

It’s the norm in the investment community. Investors receive many, many plans and pitches on a monthly, even daily, basis. It’s a given that many companies will fail within 5 years. Seasoned investors must select companies that appear most promising based on what they know at that time.

This doesn’t mean that companies that had passed the filter would become successful and those that hadn’t would fail. Some companies ended up succeeding even though they failed to attract investors.

What entrepreneurs need to understand is — investors aren't psychics; even the most seasoned investors wouldn’t know at the outset which company would become a winner. To increase the chance of getting their investment back, they pick only those that seem to have high potential. Read this, if you want to understand the reason behind how investors invest.
http://venturehype.com The Hyper Team @ Venture Hype

It’s the norm in the investment community. Investors receive many, many plans and pitches on a monthly, even daily, basis. It’s a given that many companies will fail within 5 years. Seasoned investors must select companies that appear most promising based on what they know at that time.

This doesn’t mean that companies that had passed the filter would become successful and those that hadn’t would fail. Some companies ended up succeeding even though they failed to attract investors.

What entrepreneurs need to understand is — investors aren't psychics; even the most seasoned investors wouldn’t know at the outset which company would become a winner. To increase the chance of getting their investment back, they pick only those that seem to have high potential. Read this, if you want to understand the reason behind how investors invest.
TheCrimson

We'll it's the risk they are willing to take and I guess this entrepreneurs should accepted that fact. Entrepreneurs even though they have the character and the idea but if it's not impressive enough for an angel then they have to go to another investor.
http://venturehype.com The Hyper Team @ Venture Hype

Ideally, the entrepreneur could learn from investors' feedback so he can improve his pitch and has a higher chance of success when presenting to another investor.