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Happy Holidays!

Andrew — Fri, 16 Dec 2011 17:34:22 +0000

Go Check Out the webinar After Watching (Button on Right!)

What Are Angel Investors Looking For? The Six Key Motivations of Angel Investors (#3)

Andrew — Fri, 05 Feb 2010 20:27:15 +0000

Key Angel Investor Motivations #3

Welcome to the third installment of “The Six Key Motivations of Angel Investors #3″

The first article is here and the second here – just in case you missed them…

So what are these articles all about?

One of the top ten most all time popular questions relating to Angel investors (aside from “Where the heck can I find them…”) is “What are angel investors looking for?” or “What are the main motivations of angel investors?”

Its just too easy and frankly a real missed opportunity just to say or think “to make lots of dough…”

If we consider that Angel Investors are accredited investors then making more dough is unlikely to be at the top of their motivation list and having had my own share of angel investors for my businesses, the profit motive was high up there but certainly not the only motivation and rarely at the top of that list.

I put forward that aside from financial return, contribution was also a key motivator for many angel investors. I personally subscribe to the thinking that once you are ‘secure’ a different set of needs kick in. So, aside from Contribution what do I believe is the 3rd Motive for Angel Investors?

Consider the accredited investor – what are they?

An accredited investor according to Rule 501 of Regulation D of the Securities Act of 1933 is a few things but the important sentences for most entrepreneurs are:

a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;
a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year;

Stepping outside of the legal verbiage – accredited investors are High Net Worth individuals, according to the World Wealth report written by Cap Gemini & Merrill Lynch, there are over 10 million people considered High Net Worth and there’s also a group out there in the Ultra High Net Worth Category who’s assets are worth over $30M (the UHNW definition).

Now I’ve seen all types of data which suggest how many accredited investors there are, how they are spread across the globe, the growth rates of their numbers and so on – but I have seen no studies that say how they made their money.

Given I’m just guessing here – I’m going to think about those people I know who fall within their ranks and think through how they became accredited investors – and they fall into a few categories as follows:

1) They made the money from starting companies

2) They are doctors, lawyers, surgeons or some other lucrative profession or

3) They inherited the money

So why is this all relevant?

Well, it leads me into what I believe is the third motivation of angel investors and it resonates strongly with some of the angels that have invested in my businesses.

Key Angel Investor Motivation #3 is the “Vicarious thrill”.

For those people who made their money starting their own businesses – the days when they can feel that first time thrill of seeing their startup baby taking their first steps have passed. If they’ve started and built companies – that deflowering of their startup virginity has already occurred – they cannot personnaly experience that unique thrill again. But they can invest in others and tap into that breath sucking in exhilaration of watching another entrepreneur crest that challenging hill…

For those that made their high net worth as Doctors or Dentist – investing in a young entrepreneur and startup allows them to get a real insight into a different set of experiences, to play a part in something outside of their current daily lives – why did angels start by investing in Broadway shows – the majority of which flopped? So they could do something exciting, so they could get their “vicarious thrill’.

I have a strong mental picture of one of my angel investors who had built one of the most popular pizza chains in Europe only to sell out for more cash than he can ever spend…in my view he invested in my first company because he wanted to make a contribution and he really enjoyed being a part of starting and growing a business – he went on to create more businesses of his own, to buy small failing businesses to turn them around, but he is was also a big supporter of entrepreneurs. In my opinion, he enjoyed the experience of the startup either directly or once removed.

Financial return was NOT the main motivator.

Consider motive number 3 when hunting for your angel, when locking them in and working with them ongoing. Critical to engage them are the ups and the downs of your business – the challenges just as much as the successes – at the end of the day, and this is hyper important stuff…

…one of the BEST things about starting a business and stepping outside of corporate life is the ability to be true to yourself and your business. Don’t make the mistake of letting your need for the money mean that you choose the wrong angel investors. You are not looking to exchange that angel investor cash for a new boss…if you want a boss, stay where you are and don’t start a business.

If you’ve already raised cash from angel investors I’d really appreciate hearing about your experiences – other readers would find it helpful too…if you are about to raise cash, where are you going to look? How are you going to find your angels?

If you’ve found this useful or thought provoking sign up to get email updates on the right side of the page.

Here’s to your startup success!

Best

Andrew

Ps: For those who are committed to raising funds for their business – this might help…

http://www.TheFundingGuru.com/1of10.html

What are Angel Investors Looking For? The Six Key Motivations of Angel Investors (#2)

Andrew — Tue, 02 Feb 2010 10:00:09 +0000

One of the best Angel Investors I ever had was Professor Howard Stevenson - while driving through Princeton's leafy backroads recently I had my radio tuned to NPR and was listening to Fresh Air or some such audio contribution to my ears and brain - I'm a sucker for public radio....what can I say - and after the show wrapped up, the radio broadcaster went into their 'sponsor' regurgitation telling me and anyone else listen who's dollars had made that particularly good show possible. In this case I almost swerved off the troad to hear that Howard Stevenson and his wife's fund had paid for the radio show I'd just enjoyed. Now that was the second time I had enjoyed the output of something that Howard had contributed too...and the reason I say that is because Howard Stevenson was my first ever angel investor in my first real company. Related posts:

Help Raising Funds for Startups: The Dragon Slayer

Andrew — Sat, 30 Jan 2010 00:05:58 +0000

The Dragon Slayer - Slaying the Investor Dragons

Received some questions today from readers so thought I would answer them via a post – just in case other readers wondered the same thing.

What is the Funding Guru all about?
The Funding Guru is all about helping entrepreneurs and startups go through the process of fund raising through either angel or venture capital investors. We do that through writing posts on subjects that relate to the process of fund raising, on the dos and don’ts; the tools (such as executive summaries http://www.thefundingguru.com/how-do-i-write-an-executive-summary/ ); business plans; pitch presentations and covers more peripheral elements such as the psychology of the process – i.e. helping entrepreneurs to get into the motivations of the investors and we also include podcasts and videos with investors and other entrepreneurs.

Talking to a reader this morning – he mentioned at first glance the site could be about us at The Funding Guru making the investments ourselves – almost like a Dragon in the Dragons Den giving cash to startups after some analysis. That is not the case. We invest our time (a much more precious resource than cash – wouldn’t you agree?) on helping entrepreneurs get ready to meet and go through the fund raising process and negotiate the deal with investors – so we don’t made investments ourselves – we’re more Dragon Slayers than then Dragons themselves. I would love to take credit for that line about us but cannot so full credit to Erik Luhrs (http://guruselling.com/blog/)

The funding guru is not about making financial investments in startups or young companies or even about hooking them up with investors – there are legal restrictions that would not allow us to broker deals between startups and investors. These dealer / broker relationships are closely monitored and regulated by the SEC – we do not do deals and we are not middlemen between two interested parties.

How can you help me find an Investor?
Now its true we have some great relationships with angels and the venture capital community and occasionally may introduce a particularly exciting startup to an angel or VC but never for financial or equity gain or because of any ‘deal’. I do it when I am very excited by a company and see a fit between the different investors I know and I never ever gain from either the referral or the deal. Hope that clears that one up.

Here’s another way I’d like to help – if you are looking for an investor – consider reaching out to me via the contact page above and telling me about your business with a few well written paragraphs – if they are exciting, perhaps I’ll put them up on the blog and encourage interested people to reach out to you directly.

What’s it like being The Funding Guru?
Ah – a great question! A steady stream of fantastic entrepreneurs send me their executive summaries and their business plans pretty much every day. The opportunity to help entrepreneurs is a gift and I appreciate it. So – keep sending me your executive summaries and your business plans – I’ll gladly look through them and do my best to give you feedback on how they can be improved so you can increase your chances of getting angel or venture capital investors. I was on a plane yesterday thinking about the various entrepreneurs who had reached out recently and thought it may be useful to them and the other readers if I took some elements of these plans and summaries, scrubbed them for data that would be propriety and leverage them to show what entrepreneurs are doing well and perhaps not so well. Real world case studies instead of the usual higher level stuff you usually get from blogs in this space. LET ME KNOW IF THAT WOULD BE HELPFUL!?!? and if you would like to even be one of the first Funding Guru lab rats.

Where are your ads?
Another great question. As you can see, there are no ads on this blog. Actually, that’s not entirely accurate, there are ads for a few free reports which I’m offering as ‘ethical bribes’ to encourage you to join my list. Why? Because I’d like to build a relationship with those people who like to read this blog and the best way to do that is to meet you all – face to face…obviously that’s not going to happen as much as I’d like so comments on the blogs and emails are a close second to actually meeting. So – no ads for other people’s stuff – just my own free stuff and this allows me to focus on creating value and helping you and other entrepreneurs who come to the site – maybe at some point I’ll put an ad or two. We’ll see. One idea I’m mulling over is if there is the opportunity to help early stage companies more systematically and directly – i.e. rather than writing a twenty minute blog – perhaps spend a two or three hours going through the executive summaries and business plans directly and unearthing the hidden veins of gold that run through them to improve the speed and likelihood of getting those coy and hard to get investors locked in.

Would this be a service anyone would need? Hum….

Do you have guest bloggers / writers?
Well I haven’t so far but would its actually a great idea providing the guests have some value to add to the readers. So – if you are an entrepreneur, an angel or a venture capitalist and would like to write a guest post – email me before writing anything and lets chat about what you’d like to contribute – no promises but if its good and if it will help entrepreneurs raise cash then I’m all for it.

Who is the Funding Guru again and what makes you think you can help?
I could spend the next 500 words trying to impress you but take a look around, watch this ( Who is the Funding Guru?) and if you still have questions – contact me through the ‘contact’ page above – I respond to all my emails and comments.

So – I’m not a broker or a dealer but I do often connect entrepreneurs with angels and venture capitalists if they are ready for those conversations. I am open to work directly with entrepreneurs to get them ready for that investor conversation. It would be great to get some high value add contributors to the site, we don’t advertise anyone else’s stuff and I truly appreciate all the emails I get and the ability to help exciting entrepreneurs start and grow great new businesses.

Any more questions? Reach out via the contact page above and join my mailing list by adding your name and email in the box to the right. I’ll also send you some valuable downloads to help…and if you want to get started raising money today…this will help save you months…(Supercharger)

Andrew

What stage should Startup proposal be, to post it to Grow VC? (growvc.com)
How to Size Up a Negotiation (blogs.hbr.org)
Beware the band of Angels (the-accelerator.blogspot.com)

Who is the Funding Guru? Weird, Warts and All

Andrew — Wed, 27 Jan 2010 07:49:54 +0000

[flv]http://www.thefundingguru.com/wp-content/uploads/2010/01/The_Funding_Guru6.flv[/flv]

A friend suggested I should spend a little time taking folks through ‘Who is the Funding Guru?”

As always – shoot me an email or post your comments, thoughts below. If you would like to get on the pre-launch list – sign up with your name and email in the right column. I’ll also email you a free pdf tool to help you with your fund raising.

Did you enjoy the video?

Andrew

PS: Any more questions? Reach out via the contact page above and join my mailing list by adding your name and email in the box to the right. I’ll also send you some valuable downloads to help…

PPS – want to supercharge your angel fund raising? (Supercharger) – just released and available in this format for a short time only

No related posts.

Saturday Morning – Thanks for your comments…

Andrew — Sat, 26 Sep 2009 16:42:05 +0000

Thanks for your questions and comments!

Add a comment to a “Big Mistake” video below and perhaps be one of the first to get the new course when its completed…

A Big Mistake!

Andrew — Thu, 24 Sep 2009 18:59:16 +0000

When they’re ready – I’ll give away trials of the tools to ten randomly chosen people who leave comments on this posting – all I ask is they try them out and give my readers their comments.

If you would like your chance to be 1 of the 10 – leave your comment now!

Any more questions? Reach out via the contact page above and join my mailing list by adding your name and email in the box to the right. I’ll also send you some valuable downloads to help…

Podcast: Raising Millions – An Interview with Erik Benson, MD @ Voyager Capital

Andrew — Wed, 01 Jul 2009 18:24:04 +0000

TheFundingGuru_Erik_pt1 (Erik Benson Interview with the Funding Guru Part 1)

TheFundingGuru_Erik_pt1

Today’s podcast is an interview with Erik Benson, an MD at Voyager Capital in the Pacific Northwest.

Erik takes us through a number of areas including:

What makes Voyager Capital different than it’s peers in terms of the value it brings to it’s entrepreneurs. Come listen to find out about three key areas of value that Voyager delivers – keep an ear out for ‘GTM’, ‘HPT’ and “PEP’. (A blog first exclusive for The Funding Guru!)
The kinds of companies Erik invests in and the types of companies he’s looking for…
Erik also gives us some tips on how to get noticed by Venture Capitalists if you are NOT plugged into their advisory network or alumni group. Take a listen to get a tip that could help you with Voyager and most other VCs.
One key sound bite is Erik believes its never too soon to met an entrepreneur – he lets you know how you can reach out to him in the podcast.

Could Voyager Capital be right for you?

Voyager tends to invest between $500K – $3m (first round)

Commits in the range of $7m per investment
And they are actively looking to find another 7-8 new companies to invest in with the current fund

Please consider joining the mailing list and we’ll keep you updated with when other great interviews like this come along. There are more lined up that you will NOT want to miss.

Thanks for your time Erik and thanks for your time listener!

Was this podcast helpful? Post a comment and let me know…

Andrew

TheFundingGuru_Erik_pt2

(Erik Benson Interview with the Funding Guru Part 2)

TheFundingGuru_Erik_pt3

(Erik Benson Interview with the Funding Guru Part 3)

NOTE: Podcast music is called Rocket by Kevin Macleod

The Funding Guru » The Funding Guru

Happy Holidays!

Go Check Out the webinar After Watching (Button on Right!)

What Are Angel Investors Looking For? The Six Key Motivations of Angel Investors (#3)

Key Angel Investor Motivations #3 Welcome to the third installment of “The Six Key Motivations of Angel Investors #3″

What are Angel Investors Looking For? The Six Key Motivations of Angel Investors (#2)

Help Raising Funds for Startups: The Dragon Slayer

Related articles by Zemanta

Who is the Funding Guru? Weird, Warts and All

Saturday Morning – Thanks for your comments…

A Big Mistake!

When they’re ready – I’ll give away trials of the tools to ten randomly chosen people who leave comments on this posting – all I ask is they try them out and give my readers their comments.

If you would like your chance to be 1 of the 10 – leave your comment now!

Podcast: Raising Millions – An Interview with Erik Benson, MD @ Voyager Capital

Key Angel Investor Motivations #3

Welcome to the third installment of “The Six Key Motivations of Angel Investors #3″