

Ask HN:  The Secret Sauce of Angel Investment? - gscott

I am a single founder who has put a lot of work into the product that I have.<p>Joining up with a YC type system wasn't going to happen for me for various reasons so I instead sought after some small investment money from individuals and that has worked for me.  I am about to close another round and I wanted to share the document I used this time and the formula that I believe will work for people like myself:<p>The Formula:<p>1. Create a version that works good enough,
2. Add users, even if it is for free.
3. Continue to enhance the software,
4  Once you have some traction, find people who see the vision to invest in that vision<p>Once you have a strong product you can find people who believe in it and in you since you are the one who created the product.  Your product lends you credibility.<p>I found myself needing more resources to get to the next step, which is to finish the programming for a vertical market on the officezilla.com system.  I have been working too much to pay the bills and I needed some room to maneuver so I was stuck with selling off another 5% which will leave me with 90% of the company.<p>Here is the document I used to close the last amount I needed...  I had a hard time with OpenOffice on the formatting and my grammer isn't great... but people tend to focus on the strengths of the system and not your grammer if your dealing with the right person.<p>The document:
http://www.officezilla.com/officezilla2008.pdf<p>For the single founders out there, I am not nearly as smart as most of the people on HN but regardless if you have passion and don't give up you will be successful.  I am not quite there yet, but I can see the light at the end of the tunnel and it is really pulling me forward.<p>Funding from a "VC" is next to impossible but there is money out there from angel investors, people who see your vision and like your product.
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tptacek
You are extremely impressive. We need 1,000 more hacker founders like this.
This is, incidentally, exactly what Paul Hawken says he did for Smith and
Hawken in "Growing a Business".

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whacked_new
This is so awesome. I read this thread, upmodded it, and left. But somehow I
started feeling really happy, and had to come back to write! We do need 1000
more hackers like this! Persistence!

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phil_KartMe
Great post. you followed some important start-up rules:

(1) get a prototype or "good enough" version out early and be prepared to
iterate

(2) hit a milestone that impresses investors before raising funds. measurable
customer traction is an impressive milestone

(3) only raise money when you need it, and make sure to raise enough to safely
hit the next milestone that will impress investors

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webwright
Amen to #2.

I'm stunned by the # of people who are in the "I have a brilliant idea and a
couple of powerpoint slides!" phase who expect to get funding.

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aneesh
Yeah, and there continue to be lots of people in that phase. It's even more
surprising because you'd expect the market not to give them funding, and
eventually people would learn its not worth their time to seek funding at that
stage.

So that means either some people _are_ getting money with just an idea, or the
market is really slow and inefficient.

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LPTS
I think this kind of bullshit is the new conventional wisdom. It all depends
the idea. Ideas are valubale in exactly those cases where the idea is an
elegant solution to a big problem.

There was a point where the Polio vaccine was just an idea. Would you rather
of funded the polio vaccine or some crap web app that has a missing vowel in
it's name with half a million users?

The thinking that an undeveloped idea is not valuable is symptomatic of the
lack of vision in the tech world. People interested in elegantly solving big
problems know a solid idea is way more important than a little traction. This
thinking is wrong for a class of ideas that is essential for solving the big
problems in the world that represent the best business opportunities. Silicon
Valley and it's associated culture has become the new tired conventional
wisdom. This is why silicon valley no longer solves big problems.

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gscott
> solving the big problems

If you have a good presentation and can make a case that your solving a big
problem will be financially successful I don't see why you couldn't get
funding for it.

I am not solving the worlds problems and have nothing totally unique, so a
little traction is more important in my case but maybe not yours.

~~~
LPTS
I wasn't talking about your case in particular. These cases are different. I'm
just saying that the popular (wrong) "wisdom" is that ideas are worthless, and
that's an example of a pre-post fallacy.

I'm talking about the guy above you who said "I'm stunned by the # of people
who are in the "I have a brilliant idea and a couple of powerpoint slides!"
phase who expect to get funding." I may have replied to the wrong person! I
think I was more with the guy I replied to. Sorry!

The very best business ideas will come from people with only an idea and a
presentation because elegantly solving a big problem is both the best business
proposition and the type of thing that requires only a well reasoned idea that
simplifies complexity.

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vaksel
Can you tell us how you happened to find your first investor? Since he is in
Italy it doesn't seem like this is someone you got through connections.

~~~
gscott
Through HN. I posted a document that I wanted to send to angel investors, I
didn't get too much excitement from those who replied, they were not so sure
it would work but some gave excellent suggestions.

One of the people "lurking" but didn't reply was this guy in Italy. He emailed
me, personally I wasn't sure if he was for real or not but he turned out to be
totally real. So that really moved me forward a great deal and I am greatly
indebted to him. I have never actually spoken to him on the phone, we did all
of this through email. Pretty soon I am about to register his 5% of the shares
with Nevada so he is going to be good to go, totally official owner of 5%. I
am presonally excited about kicking this thing into high gear and returning
his investment many times over.

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wumi
What is a Pro Version?

"Finish “Pro” version. This is simply the current offering but with the menu
moved to the top so space is freed on the width of the page for more user
data. _New features would go to Pro version users and not to Free version
users._ Eventually the pro version features would be very compelling."

Congrats on funding.

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gscott
One of the biggest problems is with the left hand menu taking up too much
room. People want to fill up the system with more data but there just isn't
enough room on the screen. Since I give everything away for free, I had this
amazing idea that the "pro" version would use a different template and not
taking away anything from the free version it wouldn't have any new features
yet but would as I make them :) So for the moment, the grand benefit is a
different more usable template, longer term there would be "Pro" only
features, everything that I do that is new, wouldn't get passed onto the free
users so that I could have something for the Pro version people to be happy
about (new stuff!).

~~~
wumi
Perfectly understandable, just initially, I laughed.

Just imagine telling users that a pro version is the same thing but with a
different template.

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mediageek
Great work. This is a great advice for folks like us who are looking for some
heads up. I know its hard, you have proven that with confidence and passion,
nothing can stop you from acheiving what you want to

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edw519
_I am not nearly as smart as most of the people on HN_

All evidence to the contrary.

Excellent overview for a potential angel. May not tell them everything, but
it's a good starting point for questions and discussion. It also shows that
your "finger is on the pulse," perhaps one of the most important things.

I'm sure this will inspire other single founders. Thanks for sharing.

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clb22
thank you a lot for sharing this!

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LPTS
Your story sounds inspiring. I'm just about to pull in some money from an
angel kind of like you are. We are in a very similar boat. My start up in not
software related though.

In the spirit of helping you to make your business better, I was much less
inspired by your name. officezilla? Really? Maybe one problem of working by
yourself is that there is no one to tell you when you are making a huge
mistake you are blind too. Officezilla? You are pouring your life into
something you are calling officezilla? You want that on your tombstone? The
thing that was your life's work is officezilla? You can't find a better name
for what will be your customers primary way of mentally representing you? This
will have more of an impact on what people think of your product initially
than almost anything else you do. I would suggest you use a little bit of the
money to find a good person to help you pick a better identity for yourself.
This is just an unacceptable name. I'm sorry, thats what I think. It's not the
same skillset as the work you do for a website. But it's important enough you
should change it, before your next round, in consultation with an expert, even
if it's a really big pain in your ass to do.

Good luck with your funding and your business. You sound like the type who
will be successful. I hope you change the name though. It is really bad. I'm
sorry for being so harsh, but it really is an epic fail, and you really should
recognize your limits and hire someone talented to help you change it. Good
luck.

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gscott
I own the domain "sharecircle.com" as well. I have been buying domains that
fit for specific verticals like RealtyGoLive.com, etc.

I am also not hoping to have a tombstone
<http://en.wikipedia.org/wiki/Freejack>

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LPTS
That's a start. The next step is to not present officezilla to anyone you want
to think positively of your project. You look like you are doing very good
work and are going to get a good shot at making it. It'd be a shame to have it
unfairly tainted by that bad name. This matters a lot to how people perceive
you.

sharecircle is much better, BTW. Like a million or billion or million million
or million billion or even billion billion times better.

