Sid Mohasseb, one of the Tech Coast Angels, just emailed out about a new “entrepreneur happy hour” the group is running in Orange County, which got me thinking about how entrepreneurs should (or shouldn’t) approach angel and venture investors. I’m sure there are many opinions out there, but based on my time working with angels and investors, here’s some of my random advice for would-be entrepreneurs going to the event (or similar ones):

1. Don’t start your conversation telling them the terms of your fundraising effort. All too often, I see entrepreneurs approaching angel and venture investors telling them how much they are raising and at what valuation–before explaining what the heck they do. This is like trying to pick up someone at a bar with a discussion about what you want to name your first child. Investors might ask you this info, but not before they know who you are and what your company is all about.

2. Spend as much time asking questions and listening, as pitching. Often, particularly with new entrepreneurs, the would-be entrepreneur is completely dominating the conversation trying to sell an investor on their company–without bothering to ask what kinds of investments an investor makes, getting to know the investor better, etc. The more successful (and funded) entrepreneurs I know spend much more time getting to know an investor, their investments, their interests, etc. rather than trying to do a three minute pitch.

3. Lose the PPT deck and handouts. Your goal, in an informal event like this one (or even, I would argue, LAVA’s upcoming Meet The VC event) — is NOT to try to speed through a PowerPoint deck and overwhelm the investor with your business plan and handouts. Your goal, is simply: to get enough interest from the investor to set up a more relaxed, leisurely meeting with the VC at their offices later on. An entrepreneur carting around his business plan is about as fashionable as the geek with the pocket protector.

4. Sell your experience and background, not your product features. Generally, investors you meet at events haven’t heard of your product, and might (but might not have) used similar products or heard of your competitors. Discussions of why your software/product is greater than so-and-so generally aren’t that interesting (unless you stumbled onto a subject expert in the industry). However, what you can sell, is your experience and understanding of your industry, which helps them understand you’re not just another random entrepreneur with an idea, but someone who would understand the needs and business of the industry you’re tackling. That, in many, many cases–is more important that your particular product in getting a meeting.

5. Ask for advice, referrals, and expertise. Particularly at informal events like these, or even just networking at the many high tech events in town, take advantage of the networks and expertise of the local angels and investors.  Investors tend to be among the best networked people in the local area, many angels have great operational experience, and for most who get involved in local investment groups helping companies get to the next level is a bigger driver than getting rich off their next investment. Take advantage of this, particularly in these informal events, because they’re much more likely to be open with their referrals and advice versus trying to do the same thing in a formal pitch to a firm or group.

ps. the details on the “Happy Hour”

Date:
11/5/2009

Filed under:
Angel Investing by Benjamin Kuo