
How to get automatically rejected by an angel investor - transburgh
http://entrepreneur.venturebeat.com/2009/11/04/4-ways-to-get-automatically-rejected-by-an-angel-investor/
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edw519
_Internalize that your route to getting customers is critical to your success.
Admit that to me and yourself - this is one of those things that makes or
breaks the entire venture! Spend real time in your pitch on this subject._

This sounds eerily similar to Mark Andreessen's biggest concern at TC50:
distribution. He said "how to get customers" is usually the most glaring
missing piece in so many pitches he hears.

Listen to these guys.

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jacquesm
That really is a must read. Thanks for posting this. The nice thing about it
is that the author really has seen both sides of the table and is in an
excellent position to make these points.

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joshu
some things that have been significant turnoffs for me:

\- unable to explain what the product is/does with any sort of clarity

\- founder or founders currently a student (esp an MBA student)

\- no technical founder

\- no working prototype

\- might have a working prototype, but won't let me actually touch it

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ig1
I think with a five year projection, he's missing the point. It's purpose
isn't to show where you'll be in five years, but rather to allow you to show
your assumptions and understanding of the market. Are you plucking number out
of the air, or have you derived your figures in a logical and well-thought out
manner with the assumptions clearly identified ?

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the_real_r2d2
But as a entrepreneur, Do you really know that data? What are your sources?
What are your tools to make the forecast? Yes, generally you do not have any
of them and they know that. Your forecast is just a very empirical calculation
with a large margin of error.

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lhuang
Thanks for posting this.

I disagree slightly with the point on 5 year projections. With any economic
model, garbage in means garbage out. I think everyone knows this. In addition
to re-packaging your model to answer more relevant questions as Jason suggests
why not also have a conversation on your assumptions/inputs, defending them
with the logic used and comparable examples.

I don't have vast experience pitching to angels, but I've helped large
enterprises size markets for new products and offerings. I've found that
having a good conversation on your inputs helps tremendously in getting past
that initial "smell test." Most of the time, people just need to hear the
reasoning behind using such and such multiplier, growth rate, etc.

Yes its all crap. But thats the nature with any model. Showing that your crap
smells less than others may be a good starting point to consider.

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raganwald
I recall having a conversation about this with an investor in the early 90s or
so. He told me that a five-year projection was horse-apples, but he also
insisted we do one because the exercise of guessing is valuable in and of
itself, and he wanted to see evidence that you tried to think things through.

"In preparing for battle, I have always found that plans are useless, but
planning is indispensable." –General Dwight D. Eisenhower

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physcab
There's a similar concept in PhD programs when they make you present a
timeline for future research. Every grad student knows that over the course of
2-5 years things will break, experiments will fail, people get discouraged,
interests change, money runs out, whatever...but for the sake of completeness
and forethought, they require you to detail future milestones. This stage of
planning proves to people that you are committed to what you are doing and are
in it for the long haul.

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the_real_r2d2
I think there are different monsters. One thing is to project what are you
going to do in the next five years and another completely different is to
forecast what are you going to "sell". I think the post implies that the later
is crap. For the former I imagine that all of us know that things are going to
change (as I think you imply too about a PhD program).

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vegashacker
On 5-year projections,

 _Oh wait, you say it’s a “conservative estimate?” No, the conservative
estimate is that you burn through all your cash in nine months and start
taking on consulting gigs to delay a return to a “real job” in corporate
America._

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vaksel
I'm not sure about this one:

    
    
       People rarely buy on the basis of “most features.”
    

Not most features, but they do compare feature lists and prices to see what
the best deal for them is.

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jacquesm
It very much depends on the market. If people buy an 'object' then sure,
they'll compare lists and figure out 'value for money'. Cars are a good
example where that goes.

If they buy in to a service it changes. For instance, when shopping for web
hosting you take for granted that the 'basics' are all there (bandwidth,
power, AC, a working server with X ram, HD and CPU) the differentiation then
sits in things like support quality and other intangibles.

The 'feature' list is exactly the same, but the quality of some of the
features will be what will swing a customer one way or the other.

For instance, I pay a significant premium on some of my hosting simply to get
peace of mind, 24x7 instant help.

And other parts are not that critical so those go to cheaper providers. On
paper the 'features' are exactly the same, but in practice you find out that
24x7 support can be two very different things.

And if it is a web service that is essentially free the whole thing changes
once again. You are no longer 'selling' anything, you can't compete on price
(unless you start giving money for signups ? (it's been done)), so you have to
compete in a different arena, such as ease of use.

It's hard to make sweeping statements like that and not have a whole pile of
exceptions, it probably would have been better to say these things with some
context.

But the essence is valid for the target audience, which I interpret to be for-
pay services either b2b or b2c.

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rmason
Having tried to raise money years back with a previous venture this advice
really rings true to me. It's rare that an angel levels with everybody, this
is an important article.

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imraj
unknowns are just the nature of the business, if everything was known, then
there won't be any risk and everyone will pounce on it. I completely agree
with the author that best thing entrepreneurs can do to help their cause is to
be honest.

