Yesterday I went to some Elite Business Event in Shoreditch. A while back an entrepreneurial buddy had said “come to this”. By the time I arrived I had completely forgotten why – other than Neil sending me an email saying to come along. So I guess that says a lot about 21stC marketing in itself – the power of personal recommendation. And no, money can’t buy it.
And hence, after basking in the morning keynote in awe of the phenomenon that is Karren Brady, I found myself in the Rab C Nesbitt guide to Angel investing. Or so it seemed:
The gentleman looked like the eponymous chap above albeit he had shaved and did wear a shirt and a very “Scottish flasher”s coat (indoors). Maybe it wasn’t him. However he did proceed to give a very Scottish, very un-PC, very honest and very helpful talk on Angel Investing. Or rather on how not to raise Angel funds.
To give you a flavour the last point was “have a sh1t product” 😀 … and he gave a couple of his favourite examples – one was a column to turn whiskey into water (?!). Another was a bizarre security skirt for Singaporeans. In mere seconds if you feel in danger you take it off (?!), unfold it and hold it in front of you, and you can look like a vending machine (?!!).
His first point on how not to raise funds was “be unable to explain what it is your product or service does”. Apparently an amazing 25% of applicants to his funding network fail to be able to explain clearly what their thing does.
If you go to Angelsden you will see an anodyne, PC talk by Bill Morrow who only bears a passing resemblance to the gentleman I saw talk. And doesn’t use any of the rude words. It’s a bit like me posting you a nice PR buffed-up link to Dr Jekyll’s angel business when I went to a presentation by Mr Hyde. It’s like seeing Chris Rock at the Queen’s tea party (after he has been coached for months on being polite) as opposed to seeing Chris Rock live on stage.
So you can look at Jekyll right now. But back to Hyde’s tips.
Women are 2.2x more likely to get funding.
“Men are congenitally capable of only asking for 250k, 500k, 750k, whilst women ask for £76,540.42 and then go into a long explanation that it might be 43pence”.
Have some numbers but if you look like you believe they are right you will never get funding.
“That unnameable TV show is nothing like reality – angels do not want to take 99% of your company for 24.7pence – they want you motivated and working seven days a week”.
Offices worldwide, they filter out 13 of every 14 applications, present the finalists to angel investors (they have 7,400 with over £250k investable funds) and over half of chosen applicants get funding.
“Although we have built a crowdfunding capability on our site I don’t believe in crowdfunding. Which small company suddenly wants 256 new shareholders?”
In all countries they operate in (not in the US for this very reason) of the following two pitches the latter will always win:
“We will make 1,000x return on your capital, we have 100 of our closest Stanford and Harvard buddies working for us and half of NASAs rocket scientists. This product has been proven in countless markets.”
“We don’t know how we will get on. Maybe we will double or triple your money. And we certainly need help. Each month we have a board meeting and once a quarter we have a boat trip on the Thames sponsored by Moet where, after one hour one of us will strip naked and jump into the Thames and then we will all get sh1t-faced” 😀
And here’s Rab’s rub. For a long time Angelsden bought into the idea it was about numbers and RoI and yada yada. And it is – in the US. Elsewhere though that is far from being the number one reason that their angels invest. The number one reason is “FUN”. These folks have made lots of money, retired early, many are dying young (as no zip to life) and they want something interesting and a way to give back and share their experience.
As Rab says the main thing you get is not just the money but their experience – you should be asking them what they bring to you.
Anyway you get the drift. I have no connection whatsoever with these guys. Making nothing by promoting them. However I do believe that anything – even one post – that improves the 21stC economy and can help create employment and move funding to SMEs must be a great thing.
So much of a great thing I have bothered to sit down and type it up 🙂
Oh yes and Rab’s most important point – which goes against all that old media whining…
There has never been a better time to raise funding. There is an absolute fortune waiting to be invested in good businesses instead of earning 1% in some dead bank account. Not only that they want no security at all and they will also help you.