Open letter to Jason Calcanis on the occasion of his email about raising angel rounds:
Jason you are hilarious. You do manage to put yourself out there every time you send out a newsletter, and this one on angel rounds is no exception.
You have it right about how to be an angel. Although I also talk to fifty startups a year, I invest in maybe five, never more than $25k, more often time and talent and not money. That buys me the job of strategist and evangelist, which is always an unfilled position in a startup company. In the past three years, because there have been few exits, I have haven’t had much money to invest, but I’ve still got the time and talent.
I figure out how to take the product to market, and try to find people to hire. I advise people how to exist without raising more money, and how to have decent expectations about investors. I also explain how this idea they have will change, maybe not the world, but certainly their lives. They may lose their marriages, the childhoods of their babies, or their friends, And that’s if they are successful.
Most entrepreneurs are so sure of their ideas that they don’t realize what it’s like to put one’s hard earned money in the hands of someone else. They come to pitch me, thinking I should really want to invest, when most of the time they don’t have anything, and have no idea how to get from where they are to where they want to go. Many don’t even know where they want to go.
The big missing element in most of the pitches I hear is market research. Let me say it again. Market research. Many startups just assume there is a market. Fortunately or unfortunately, I owned not one, but two marketing companies before becoming a coach and advisor, and I know all too much about the vagaries of markets.
If I think the entrepreneur doesn’t know anything about markets, I like to be the interim marketing person without investing money. It’s not money the entrepreneur needs at this point, it’s knowledge, and you can’t buy that. I’m the cheapest form of market knowledge they can buy, because I will work for almost nothing for the right people.
I wish I were more successful in putting people I know would be helpful to each other together, but chemistry always stands in the way and I often can’t get a company to hiere the right people (e.g. the people I want them to hire). Sometimes I even try to merge two somewhat similar ideas into one company, but the entrepreneurs are stubborn and usually won’t partner up. They would rather follow their individual approaches.
On the personal side, of course you are tired. You have had a child, which is a life-changing and sleep-changing event. You stay up late playing high stakes poker. You have started a company. You are wrestling with Mahalo, a company you are obviously getting bored with ( no judgment here, because I do that with something after about three years, too). And your tussle with Facebook set off a time-consuming firestorm.
Oh, and you also broke up with Arrington.
I lke what you are doing with Open Angel Forum, and I think it’s necessary. But I like what you are doing with This Week in Startups the most, because that’s where you have the most power to have the greatest impact on entrepreneurs who will listen. Keep up the good work.
