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My experience after pitching to an old school VC/angel

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My experience after pitching to an old school VC/angel

#1

Post by aherlambang »

As an FYI, I am no where located near the valley/bay area. I live in an urban city in Arizona where there's only one well known/reputable VC in town, not a lot of angel investors in here. If you are a tech startup in AZ, I guess you know what I am talking about. The culture is very different to those in SV.

I am about to launch my startup and currently is in the seed stage and have a working prototype done. My team just did a pitch an hour ago to this guy, had no high hopes as we've heard various kind of comments about him. We pitched the whole idea, first question asked was about the revenue source, second sentence that came out of his mouth is "do you have a business plan written yet"?

Just after this sentence was launched, I knew exactly that this is the wrong person to talk to. Which top VC's/angels in SV asks for a business plan during a seed stage of your startup (if there is one please let me know, then maybe my perception is wrong)? I get his point that we need to do more market analysis/research on the app, however to actually have a solid well written business plan at this stage is just ridiculous.

With regards to market research, I asked him if we created a website for user to signup, remind them when the product is launched(using service such as launchrock) and showed him we have 500k users signed up, would he be convinced enough in the market of our app? Then he sort of gives an ambiguous answer to it. Again, a ridiculous thought from my point of view. Almost every startup nowadays do use this strategy. I guess he just doesn't notice that.

Point to be made here is that, doing a startup is hard, but it's even harder when you're outside the valley. I know it's all about your effort of you to get connected/network, so you can reach Paul Graham/Dave McClure/Yuri Miler, etc. Some say that if you can't get those connections then you lose already. I don't have any connections with people in SV who can introduce me out to these great angels/VC's and that adds another challenge for me. There is a startup meetup here, but only 5-10 people is in the group and mostly they are just talking about side projects that they have, no one rarely talks about angels/VC's (another dead end for making connections to SV). Was planning to just put up my startup at angel.co and see what happens, don't know whether it's the right time or not. One concern is that most of those investors doesn't invest outside of SV. Would be way much easier if I am at SV, so to new startups out there in SV, be grateful for yourself as you're already one step ahead of us who are outside of SV.

Yet, this is just another confession from a startup founder experience. Feel free to comment

Re: My experience after pitching to an old school VC/angel

#4

Post by gettinstarted »

It's great that you got a first pitch out of the way. Congratz to that!

First off, startups outside SV/SF get funded...don't get it twisted. But, boo-who'ing over the fact that you can't get face-to-face with someone connected isn't going to get you anywhere. So, you are doing it wrong. There may not be lots of events in your city, so go to them. Period. If you can't find a way to make it happen, you probably don't have what it takes anyway. When you get there, network the hell out of them. Pitch people on the spot (don't suck!) and have a working product demo with you.

Secondly, when an investor asks for a business plan, they probably aren't from the SF school of investment thought. And while you retort mentioning things you could do to show traction should have been more relevant to him than they were, you really shouldn't have been pitching without traction. It sounds like your project is consumer facing, users get some value, but don't pay (ie maybe geo/social/photo/blah blah). If that's the case, your product should have a small, but growing, core group of fanatic users, before smart money will pay you the time of day. Once you have that, go to angellist.

It doesn't matter where in the world you live...if you have a good product in a good market and traction, you'll get meetings (though it's still a numbers game).

Listen, it's supposed to be hard-otherwise, everyone would do it.

Re: My experience after pitching to an old school VC/angel

#8

Post by aherlambang »

mg1313 wrote: post #6
suking wrote: post #5

There's a few firms that invest in AZ. Highway 12, Flywheel, GRP... to name a few. Sounds like you didn't do enough research on this person imo.

I wrote an article about this: http://www.quora.com/Mircea-Goia/Startup-scene-in-Phoenix-Ar...

I am well fond of all of that

Re: My experience after pitching to an old school VC/angel

#10

Post by NY_USA_Hacker »

To play devil's advocate here, an investor SHOULD (although apparently few do) want to know about the 'potential' of the company after 500K users have signed up.

For this 'potential', not even the 500K means much. So, to understand this potential, what's an investor to do? One approach is to wait a few years, but then it's too late to invest. So, how can an investor understand in time to write a check to the entrepreneur? If I were writing checks, then I'd want a clear presentation in, say, a 'business plan' of just why the potential after the 500K users was so good.

Next, if I were an investor, I'd want this understanding of the potential after the 500K user BEFORE I wrote the seed stage check and before the 500K users had signed up. That is, I'd want before any checks were written a solid case made, on paper, that this was a good business direction.

I'd want to take that paper with that solid case, after the meeting with the entrepreneur, and study the case, think about it, etc. before deciding to write a check.

Actually, it really is possible to give good descriptions of significant projects just on paper and to do quite well evaluating the projects, again, just on paper. And, the evaluations can be so good that the subsequent execution can be quite reliable, even for leading edge projects. Examples? Well, there is a funder and user of technology. They are by a very wide margin the most important funder and user of high technology in Silicon Valley, the US, the world, and all of history in this solar system. Thankfully for US national security, this user is, yes, the US DoD. Some of their history includes WWII projects in radar, sonar, the proximity fuse, and the atom bomb. Then they did little things like the hydrogen bomb, ICBMs, SLBMs, GPS, stealth, the SR-71, the F-22, ARPAnet, aka, the Internet, little things like that. The evaluations were nearly all just on paper, and for approved projects the execution was good with very high reliability.

Evaluating projects on paper instead of just with 500K users can be important. Maybe you met the only VC left in the US ready, willing, and able to evaluate projects just on paper.

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