

My experience after pitching to an old school VC/angel - 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.<p>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"?<p>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.<p>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.<p>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.<p>Yet, this is just another confession from a startup founder experience. Feel free to comment
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djb_hackernews
I don't really seem the problem in his line of questioning.

Isn't this Paul Grahams goto question? Where is the revenue?

I wonder what your expectations actually were for this meeting? And what you
imagine pitches would be like if you met with any of the SV heavy hitters.

They won't be any different. Getting people to give you money is hard work,
and I get the impression you think the money is easier in SV? So easy in fact
VC's don't bother asking questions about revenue and market research.

Plus, you don't even have a signup page? What do you have?

I'd get my ducks in a row before I started asking people for money if I were
you.

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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.

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hnbd
Yes, I'm sorry to join the crowd, but it does seem like you need to adjust
your expectations.

Ideas are great but what's better is an idea with a business plan; especially
to an investor. This is especially the case if your idea doesn't clearly
identify a revenue source. Unless you have a reputation or history creating
successful start-ups, you shouldn't expect to just have someone take your word
and believe that your start-up will generate revenue. There may be investors
out there that just take chances like that...I wouldn't know. But I still fail
to see the fault in his expectations I guess.

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aherlambang
It seems that you guys are misunderstanding my point here, I take this VC's
point of having to show a proof of somewhat the business be profitable. I
understand this very well. If I am positioned as himself, I would be asking
the same thing.

What I don't like about it is the business plan that he's asking us to write.

I know getting money from people is hard, I am not expecting him to write me
off a $100k check based on what I have. My point is that is it necessary for a
business at this point.

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guynamedloren
I'm curious to know more about exactly how you plan on acquiring your first
500k users and how long you expect that to take. Unless you have mad
connections, 500k users is not exactly a walk in the park. If you aren't
pulling revenue at that point, still haven't developed a business plan, and
have zero investment, your startup might be dead by then. This reasoning fails
if you're bootstrapped, which would leave me wondering why you're trying to
raise seed funds anyway.

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vrikhter
What's the app? Feel free to drop me an email if you'd like to chat, maybe I
can provide some advice. Vladik dot rikhter at gmail

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mg1313
:))...I think I know you from somewhere :). So, you did talk to a VC..is he
from SV or from Arizona?

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aherlambang
yes and I think I know you from somewhere =). sent you a mail buddy

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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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suking
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.

~~~
mg1313
I wrote an article about this: [http://www.quora.com/Mircea-Goia/Startup-
scene-in-Phoenix-Ar...](http://www.quora.com/Mircea-Goia/Startup-scene-in-
Phoenix-Arizona-what-I-have-found-since-living-here)

~~~
aherlambang
I am well fond of all of that

