8. DONTS
Give Advice (Unless you really know)
Take longer than 2 weeks to say Yes – Otherwise say No
Invest in Tranches. $25k today and $25k if you hit Y
Insist on Patents
Expect Revenue Predictions
9. HOW TO PICK A
WINNER
Pick a small $ amount OR invest in a fund
Close to the problem
Guess
Measure but not
Revenue
Improve?
Acquisition
Engagement
Measure
Build
A programmer
10.
11.
12. VALUATION
Invest enough money for them to execute for 12 months.
Previous startup
Domain Expertise
Traction
Worked in technology
Longer sales cycle
More capital intensive
Started 2 companies. Booking Angel & Spreets – Sold to Yahoo!7 just 7 months after receiving our first Angel Investment.Since then I have done some angel investing of my own.Events like this are so important because if us as Angel’s don’t get better at deals – the good companies are just going overseas. I would have much rather given somebody in this room 18x their money in 7 months.I wanted to start by talking a little about my First company Booking Angel. It was an online reservation system for restaurants. I used to think that people who had money were also smart so in 2004 when I was starting out I started chasing money.
What I didn’t realise is that ChasingMoney Would Fuck my business..
first went to the government who were handing out COMET grantsGovernment had initatives like COMET – commercialising emerging technology.Investors- extremely successful at putting together deals in private equity or on the ASX. When I met with these guys they made me discount my future cash flows to come up with current valuations.
I even pitched on TV shows that had money. Show was axed because they screwed over a young guy who built a swag.We don’t want to try and propose bad deals to Entrepreneurs as the good ones will just do like I did and head overseas to places like silicon Valley or Europe to do their deals.
When I arrived in the valley pitching my Online Booking System with amazing patents and detailed 10 year cash flow forecasts and knowing the 4 likely companies that would acquire me in the next 3 years – they probably laughed at me after I walked out the door. I was thinking too small. US investors want to know how what you do will change the world and will challenge you to think like it. Valley VC’s also hate to say NO – Its always get back to me when you have more traction. Thankfully I’m pretty persistent and as they admire my persistence their feedback got more helpful. They began to tell me what was wrong with my business and I could start looking at it with fresh eyes. The founder of eventbrite Kevin Hartz asked me why my business wasn’t successful? What was stopping it.So I came home to start Australias first group buying site Spreets.
It may seem as though Im praising US investors.Techvs Non Tech – Its just that all of the investors in the valley are ex founders of successful companies
Plan – can the team execute for 12 monthsProgrammer / Bus DevHave they been close to the problem. They will make better guesses
