Two Hours with an Angel Investor

Posted: February 26th, 2010 | Author: Julio Hernandez-Miyares | Filed under: New York City Startup, Startup |

For two hours on Wednesday evening February 24th, I and a group of other interested and hopefully entrepreneurial folks were treated to a discourse on Angel Investing – the when and how to ask for money from an Angel by David Rose, a dean of the art in New York City .

For those that have an interest in the presentation, here is a link to the audio.

The event was hosted by New York University’s Stern School of Business and the packed house seemed to be filled with mostly young and hungry NYU business students. The invite was not limited to just students but open to all that could reserve a spot which is how I got in.
I did take a front row seat with my polished Apple , spitting distance from Mr Rose and plopped myself down for what ended up being an enchanted two hour presentation.

The crux of the presentation was tailored around the protocol of enlisting angel funding for a startup. I won’t redact the entire two hours into this post , what I will concentrate will be on what I got out of it as singularly important.

• Have your elevator pitch

As the saying goes, you should be able to describe what problem your business attempts to solve in the short period of time that you may be in an elevator with someone, Ok, let’s assume you are in a New York City high-rise but notwithstanding, you have 30 seconds or at most if you are lucky 1 minute to provide the thrust of what your business strives to accomplish and be.
That is much harder then it seems and takes considerable thought and work to get it right and then practice to be able to deliverable at any time planned and most importantly unplanned. You never know when you will be presented an opportunity to deliver the pitch. For example , at the tail end of the 2 hour presentation, 3 people were selected at random to deliver their startup pitch to David Rose. The ground rule was you got two minutes and nothing more to present. Being concise but thorough enough to enlighten someone you have just met with the pretext of your business so that they come away with a general understanding and more importantly a desire to learn more is key if you want to successfully navigate the avenues of angel funding Remember, though quite naturally one is the most important person in their own universe or mind, the full universe is full of countless others who feel the same and thus the competition for attention is intense. Get your message tight and have it fit within that veritable 30 second window. imagine you were given 30 second spot during the Super Bowl.

• Craft a Business Plan

Even though David Rose admitted the likelihood of an angel spending time combing through a business plan was low, the strong expectation is the entrepreneur would expend the time and energy tailoring a business plan with a time horizon of 3 to 4 years. Anything out further then 4 years is dismissed as pure fantasy.
There is a recognition that even a 3 to 4 year horizon will be liable to be off and require constant recalibration. Nevertheless the act of preparing the plan gives evidence to a necessary discipline that is important for the budding business itself as well as an artifact that demonstrates to those you want money from that you have applied a degree of rigor to how your business purports to operate.

• Personal investment is key

It’s your business! If you don’t put some of your own funds on the line, how would you expect someone else to take a chance?
That seems very self evident but was hammered home at length. The absolute amount of personal investment is not the key factor as that will depend on multiple factors. Are you actively investing your own capital? How about Friends and Family who are the people who know you best? Even better, is there already a revenue stream from customers who are voting affirmatively using your services or products. If the answer is no to all above, fat chance you will have a willing angel investor.

These represent some of the things I took away from the two hours. It is a major distillation of what was a broad based educational presentation of how to interact with a potential angel investor if that is the path that makes sense for your startup.
Now that I have gotten myself on a magical listserv, I was also invited to an event this coming Monday March 1st 2010 to review the finalists of NYU’s Stern Business Startup Showcase. Starting with over 170 entires, the group has been whittled down to 40 semi-finalists in a content to garner from a pool of over $175,000 in capital for the winning ideas. I suspect I will be privy to a slew of more social networking or aggregation sites which seem to be in abundance as startup ideas but I hold out hope that doesn’t end up being the case.