process to start looking for seed investment

[sam de silva]

Hi there,

Can anyone point me to a guide that outlines what an entrepreneur needs to do before he/she starts approaching seed / angel investors?

Are there any guidelines, or specific steps that have been documented and accepted as standard practice?

Any tips appreciated.

Thanks and best, Sam.

----

SAM DE SILVA
CEO, Common EDGE Pvt Limited
s...@edge.lk | +94 77 696 5358

digital strategies for the real world

[Hugh Stephens]

Hi Sam

1. have a product, not just an idea (could be an MVP etc, doesn't need to be "built out")

2. have a "team" with creds to align with the product/market (HR product should have founder/s with HR knowledge for example – hard to build/sell a product for a sector you don't understand)

3. demonstrate validation +/- execution (have customers, some kind of validation that people do/will pay)

4. having a pitch deck is pretty "standard" – google will find you all the instructions you need, and examples abound

But beyond that, it all depends on the investor as to what stage company they want to invest in, etc etc. As you would expect, you should know as much as possible about the investor/angel before you pitch to them - is your product the kind of thing that they invest in (e.g. B2B SaaS vs social network vs marketplace vs content shop etc etc)?

I'm sure others will also have thoughts, but that's been my experience to date.

Hugh

[sam de silva]

Hi Hugh

Thanks for your feedback.

Here's one challenge I am having and it's how best to identify angel / seed investors.  I get it that it's about networks - and going through contacts. And in Australia - I've found this space to be very secretive. In the US - everyone's an angel investor it seems.

So a specific question - I am wondering how useful Angel List (angel.co) is - and if you or anyone else had struck luck interacting with potential angels?

Thanks and best, Sam.

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[simran]

Hi Sam, 

The space is not secretive at all. 

Angel's for some of the part are sick of people coming to them with absolutely ill thought out plans, no team, no presentation, virtually no idea, but wanting money! 

People are VERY WILLING TO HELP if they think you have taken some steps to try to find out some information for yourself first - i mean, if someone can't be bothered researching any information for themselves, then why should someone else spend their valuable time helping them. 

A way of telling if an angel is "real" is asking how many investments they have made before. That's not to say people aren't willing to get into it for the first time, but yes, there are plenty of want-to-be's that are testing the waters, just like there are plenty of want-to-be-entrepreneurs just wanting money for nothing! 

I dare say, your original email did not show any signs that you had made any effort at research yourself. I'm not saying that yo have not, only that your email did not give that impression, so people will mostly read it, dismiss it as a "i'm not his personal web search butler" and ignore it. Despite that, Hugh responded to your call with some very valid, and well structured points, and what you come back is with is the space is secretive. 

From your signature i note that you have an overseas phone number, are you even in Australia? Have you been here and seriously tried to approach angels, or was the comment off the cuff? 

simran.

[sam de silva]

Hi Simran,

I a currently overseas, and I've got to many events back in Australia especially during 2013/2014 ... I just found the scene very different to say on the West Coast ...

My email was to find out if I was doing something wrong, or if in fact the process I was following was the right approach - and Hugh validated this.

However, I must say that from my research and inquiries, there is little detail / concrete detail on how a founder makes the connection with an investor. One step is obviously luck, and the other is via hackathons / etc... I know there's a number of "middle men and women" who try to broker - but I was interested to find out if there's a clearer pathway.

Email lists like this, and there's plenty of them, are a community, and even if I was a newbie throwing out a call - one would hope there'd be responses. That's how you build an ecosystem or a community.

Anyways - no problemo - as they say!

Best, Sam.

[simran]

Hi Sam, 

You make some observations, i believe valid... there don't appear to be any clear channels where "angels" are listed. There are a number of groups like Sydney Angels, but unfortunately, their reputation (or track record) are not something the ecosystem can point to with pride. 

However, there are plenty of angels, many of them are at events, for example, people like Andrey Shirben, Terry Hilsberg, Pete Cooper and the likes can be found at various events while others like Chris Gabriel won't be seen at many events at all, however, they (and many others) are very real angel investors, probably with over a dozen investments each under just in the past few years alone.

I have personally invested in about 6 companies (albeit small amounts; not including the 8 companies that come via pushstart as i was an investor in the round), and get sent over a dozen pitches a week - the others i have named probably get twice or three times what i get (they are much more professional investors), so you'll appreciate that they don't have time to reply to every pitch they receive, they filter based on the recommendation it's come via, the quality of the application and of course, their preferences  for particular types of businesses. I doubt very much if the US (or anywhere else) is different. If you tried to cold call/email Brad Feld or Dave McClure with a pitch that is less than brilliant (and sometimes even then), i suspect, you won't get a response - so why should anyone expect anything different from any other investor (everyone only has 24 hours in a day, there are no exceptions!). 

As for expecting responses to questions, the community will absolutely step up, but after the honeymoon period, if it "appears" someone is asking for something without having made "any effort" themselves, people don't like to be treated as other people's butlers. All i'm saying is that if you give more context when asking something (aka, if you had mentioned that you had been to events in 2013/14, named a few of them, given your experience - not asking for pages, just a sentence or two), then you are much more likely to get people making an effort to respond with more effort and thought. You might be new to this list, but i suspect you are not new to "mailing lists" in general, and will notice that pattern everywhere. 

Anyway, looks like you must have been trying to start some things here in Australia in the years gone, it's always good to have entrepreneurs with a variety of experiences doing exciting things, hope you come back and give it another shot, the ecosystem gets more vibrant by the day. 

kind regards, 

simran. 

 

[sam de silva]

Thanks Simran,

I no longer see Australia as a market for what I do (actually it's population size limits scale significantly) - but I do see Australia as a source for investment.

Anyways - shall leave it at that. Thanks for your feedback.

Best, Sam.

[sam de silva]

Really do appreciate your feedback and tips on contacting strategies. Let's see where things go. I'll do my homework :-)

[@iCentralCo @pc0]

Hey Sam, we compiled some resources during SydStart judging over the last five years that have proved to be useful, most of the winners and finalists subsequently received funding.

It is now hosted by The Start Society, we are collecting more resources like this but the current stuff covers judging criteria and a sample form you can get people to fill out if you want do get feedback.

http://thestartsociety.com/pitch

This is useful for investment, talent, partners and selling. The length is best for 3-10 mins. For shorter pitches use the gaddy/gaddie format (google it). For longer pitches tell your story, cover the 3-10 minute stuff and drill down on differentiators and momentum/progress.

Good luck.

Cheers, Pete.

@pc0

On Saturday, 18 July 2015 19:46:40 UTC+10, sam de silva wrote: