Web 2.0 companies connect one to many, about little or much, deliver it whenever and wherever, on whatever, to some or none.

Web 2.0 companies are delivering the infrastructure which was first disconnected, then it became more connected, and eventually it will seamlessly merge everyone’s connection for yet unknown functionality and value. That’s the next big app and web 2.0 companies are defining NOT INVENTING and delivering the functionality to achieve it.

I’ve been reading some interesting posts recently. And I gotta tell you they got me aggravated for a couple of reasons. Some high profile bloggers were blogging about web 2.0 bubbles and the difficulty those companies are having making sizable revenues. As always the form of the blog adds to it seeming smart and logical but this loop just doesn’t hold weight at all. It’s aggravating.

Here’s why. The entire loop of conversation from Dharmesh Shah to Don Dodge, to The Financial Times San Francisco based writer - Richard Waters (2)(3), misunderstands the value transfer occurring from web 2.0 companies to users and the requirement to be served some of these functions now and some later and so on. And that says they misunderstand the true nature of applications.

So few pundits could tell you the browser was the new desktop, equally few can tell us now how the pieces of web 2.0 functionality and applications will coalesce and aggregate. But one thing is for sure – web 2.0 functionalities WILL coalesce and aggregate and integrate! And the aggregation and integration of numerous of the functions and methodologies will produce revenues just as advertising did for search. From an application point of view there’s nowhere else to go.

That is what is happening right now. Viable hardware connectivity both wireless and wired is providing this new channel that will be a primary delivery device for probably all forms of communication. And no one is going to use the operating system, and soon no one is going to use the browser.

Like the IPhone – there will be an interface which you do everything from – call that an O/S – but when all it has is personal connectivity and functionality it ceases to be seen that way. So who will be the providers then? Google will be a big player, Microsoft will, IBM will, Verizon will, and in their domains Boeing will, and Federal Express will, and so on and so on. Are all of those guys going to build these same functionalities? Won’t many lease platforms, or buy companies, or seek delivery from their friendly vendor behemoths? Where’s all that stuff coming from?

Web 2.0 is about rapid low cost delivery of narrow applications and functions that do stuff for users now. The costs to get there are modest compared to prior periods; the costs to scale should investors support the endeavor are ordinary. Of course the functionalities that are bleeding edge, that are common, that are narrow or wide, and on and on, will be THE desktop – on multiple devices and platforms – tomorrow. Is that not obvious?

Of course the desktop of any device will be occupied by several behemoths that obtain their size from genes or acquisition of 8-15 web 2.0 companies, or maybe 20-30 of these technology slivers, some big and some quite narrow. So if 12 behemoth guys eat up say 12 web2.0 companies each, that’s 144 right there. If 1 out of 4 seek that exit that’s almost 600 companies worthy of chasing the golden banana. If there’s just an error rate of 15% that’s 700 seekers! If there’s room for 700 funded companies and 1 out of 10 companies that chase venture capital actually get it – then there’s 7,000 web 2.0 companies out there. But that makes sense – it is NOT A BUBBLE. Go2Web2.0 report site postings of 2,445 web 2.0 logos as of May 30^th, 2008. Maybe there’s room for another 4,500 logos too.

Now as to the venture capitalists. They have incredible expertise of company formation and management if things go right. Yet unfortunately the one trick pony they ride into town includes decimating the endeavor if their attempt doesn’t succeed in the timeframes related to the size of the investment/bet. At the end of the day their selection criteria and success rate as an industry and the high payout they must provide to attract funds for such uncertain futures means that as educated and expert as they may be at best they are bettors. The larger they are the more they can push but at the end of the day they don’t’ control the applications nor the demand for them and the time in which it will take the market to get to them. Having said all of that the poor selection and management exhibited by venture capitalists means that many bets have to be made promoting the expansion for possible providers. This is healthy and valuable. However the payer is not the venture capitalist – its is, and always has been the entrepreneurs.

So Don, Dharmesh, and Richard, take a hike. No one that’s developing the next big thing wants to hear about your bubble bologna.

Thanks to Corrine Wyard and Alex Magary for reading drafts of this..

StartUp entrepreneurs seek achievement. They pursue because they see value, accomplishment, reward, and recognition. Many of them expect to succeed when they start - few of them do.

For the largest group of startup people economic success is a derivative of great product development, deployment, and customer satisfaction. That formula for business or startUp success isn’t new.

Paul Graham expresses his views about the path of venture capital while Umair Haque goes on to confirm and expand . Both views are well thought out and make lots of sense. However both views really leave the entrepreneur out of the liquidity equation. At the least, both commentaries seem to reduce the critical path nature of the entrepreneur and the factors motivating them.

The web as a delivery platform and its inherent qualities magnifying delivery and access options - that’s the new game in town, of course. What both posts seem to ignore is the opportunity to remove risk in the startUp pursuit by shifting that to a much larger player. Does the risk of continuing outweigh the benefit of security? Most startUps never even get to consider this equation. But for those that do have a choice - there’s little other they focus on. Ignorance, inexperience, ego, they can all get in the way - but nonetheless every entrepreneur is constantly working the cost and risk to continue versus the benefit of getting out.

Certainly startUps are weighing their risk and reward 24×7 on practically 360 degrees of their startUp world. Before the startUp person even began the company and didn’t do something else safe and ordinary - the entrepreneur made this calculation. Despite how terrible the odds are, the entrepreneur actually, without hubris, comes to believe they can and will get there - then they do their startUp.

StartUp founders constantly know and evaluate the stages they progress through. Despite varying success and failure indicators, they know when their grip on their position is tenuous and high risk. They know when they’ve become a leader, albeit small and have a likelihood of some success. And they know when they are positioned to become dominant and command their product or category. Haque states the business of venture capital firms saying “You may disagree with me - but I think they’re in the business of creating new industries, markets, categories, and value chains.”

WHAT? Venture capitalists? Is he really saying that? SO the guys that pay for the boats and aircraft should sail and fly them? WHAT? No one would use those transports if they knew that was the deal.

This is what’s wrong with venture money. Venture money used to be money that supported the entrepreneur and brought resources to the benefit of the company and stakeholders. It accelerated rather than directed. In many ways what venture has become is an architecting exercise with a poor performance record executed more and more by large venture firms with large headcounts, with large funds, operating a mechanical investment design and deployment. Their returns are pretty much guaranteed since the vcs design and control the cost of capital based actually SPECIFICALLY on their poor performance record. The allure and the need for capital is so strong, the entrepreneurs are the only payers in this inefficient process.

In some ways Haque has upside down what really happens. His first mistake is when he states “The answer’s very simple. Because every company that had the potential to be economically revolutionary over the last five years sold out long before it ever had the chance to revolutionize anything economically.” And then he states “Think about that for a second. Every single one: Myspace, Skype, Last.fm, del.icio.us, Right Media, the works. All sold out to behemoths who are destroying, with Kafkaesque precision, every ounce of radical innovation within them.”

Who cares what the acquirer does? Acquisition and integration whether soon and voluminous or later and little is really irrelevant. Whether the value transfer is feature or solution driven isn’t really relative either. In a rapidly changing technology environment large players simply don’t have the management skills, technical resources, nor the exclusivity of thought to generate and deliver all of the newest requirements that may protect or leverage their numerous competitive positions. They need to buy what they lack in capability or were late to build.

Paul Graham says “Corporate M&A is a strange business in that respect. They consistently lose the best deals, because turning down reasonable offers is the most reliable test you could invent for whether a startup will make it big.” Paul is an astute observer with many valuable things to say - but not this one. More often than not Corporate M&A overpay for their targets - witness the Haque brief list above. And when those offers are rejected the guys rejecting often have little additional knowledge of success but more alternatives than bailing out then. Right? Wrong? You just don’t know.

It’s exactly upside down. Sellers sell out because they don’t have a grip on their category. The only responsible thing they can do for ALL stakeholders is to sell out or continue to increase risk of the ALL value they have built. Assuredly sellers know better than the buyers they will not maintain their footprints in the future.

If Haque were a mutual fund shareholder with a 401k would he keep HIS money in a fund manager who didn’t understand the staying power of their investments. He’d be writing blogs excoriating the elite fund manager for not paying attention and not getting out since their positions were not sustainable.

His second mistake strikes when he says “Let’s replay the Google story. Google, despite serious interest from Microsoft and Yahoo - what must have seemed like lucrative interest at the time - didn’t sell out. Google might simply have been nothing but Yahoo’s or MSN’s search box.”

And then Haque takes an extra whiff of the bat to strike out with “Why isn’t it? Because Google had a deeply felt sense of purpose: a conviction to change the world for the better. Because it did, it held on and revolutionized the advertising value chain - and, in turn, capital markets gave Google an exuberant welcome.” Deeply WHAT! Again and for the hell of it WHAT AGAIN! ARE YOU CRAZY? There was no altruism being executed when Google management spurned the paltry offers.

They knew the massive size of the application they had written - they knew its performance and extensions. They knew what came next for them and how long the competition would take to get where they were and how far they’d get in the mean time and so on. They were being undervalued by those suitors and they knew that too.

WHAT ARE YOU SAYING? Whew! Google had an absolute lock on their product and category. They had mass, magnitude, and growth and they knew it and everyone else did too.

And therein lies the hook. Myspace, Skype, Last.fm, del.icio.us, Right Media, doesn’t the evidence drive home the correct calculation of the sellers? The buyers didn’t squeeze any life out of the sellers. The buyers bought at the last moment the seller could hang on. Why else would the seller sell?

Some of the answers Haque suggests are interesting. And Paul too. But they’re older suggestions. Trading cows that couldn’t be liquid in M&A or IPO instead on a secondary market is 5-10 years old and only for benefit of the tinkering of portfolio accounting of the venture firms themselves.

Someone may recognize the upside down qualities venture firms have created feasting on the flesh of startUps. Venture as an industry is pretty young. The opportunity in the venture business is to provide a lot more access to funding, designing less with lower investment costs, smaller bets, and lots more of them.

The venture business is a lot like sport or entertainment, and at the end of the day the inventory goes home and if they won’t come back - you’re out of business. A realignment of the performers’ share and the promoters’ share is bound to occur.

Thanks to Keith Erickson, Corrine Wyard, Alex Magary, and Janey Levine for reading drafts of this.

Google, Facebook, and other household names - would have sold out if they had only got their price along the way,

writes influential Paul Graham in the article “Why Aren’t There More Googles?” Further, he posits, had acquirers been smarter they would have paid more earlier, and of course much less later. His inferred conclusion for the entrepreneur says don’t lower your price to the acquirer’s offer – drive the company instead.

Graham is right, ONLY, for the tiniest number of startups.

And therein lays the issue, narrow, yet of critical path importance to most startUps. The companies he speaks of, and their experience, are achieved by so few startUp companies and their founders, executives, and employees. Iconic commentary from someone such as Graham is rapidly heralded across the web and read as though it is the operating direction for your startUp.

Yet Graham’s advice isn’t relevant to the largest portion of the readers since 97% of startUps don’t get an exit.

Graham’s article is persuasive, logical, interesting, compelling, but NOT RELEVANT and maybe even be bad advice for practically all startUps. For most companies – it is a dead out struggle – all the way to anywhere they get!
It’s not controversial to assume no more than 1 out of 10 companies pursuing capital get funded by VCs. If venture capital firms do as little as 4,000 deals annually that’s 40,000 legitimate startUps seeking funding – annually. From 1995 through 2007 VCs invested $351B in 39,000 companies meaning 390,000 legitimate companies pursued venture capital and 90% or almost 350,000 didn’t get funded! A non-controversial VC portfolio view might be 30% of venture investments succeed, 30% go sideways and venture capitalists close or bury 40%.

Venture capital seekers succeed 3% of the time! BUT 97% DON’T!

Therefore the straight out advice to startUps at almost anytime in their development is if serious cash or reasonably liquid stock comes your way and that makes a profit for you and your investors and you think the price isn’t high enough – TAKE THE DEAL!

All startUp numbers indicate your zenith is more than likely now – recognized uniquely by that offeror at this point and not another – and never to be as robustly valued again. If you knew that now you’d take the deal.

Graham speculates the reason many offers are spurned as “More likely the reason is that the kind of founders who have the balls to turn down a big offer also tend to be very successful. That spirit is exactly what you want in a startup.”

WHAT?

Graham’s startUp description happens to almost NO ONE! Big offer? How many startUps get a “Big offer”? It’s like saying what happens to Brad Pitt and Uma Thurman must happen to most people. It doesn’t.
If all of the success signs are obvious in your startUp, good buzz, potential or actual customers buying, product working, yet MAGNITUDE & MASS have yet to be achieved, the likelihood of success is only marginally better than when you started.

Google, Facebook, etc. – the Graham audience – were well financed practically from day one and they got offers once and because their products achieved magnitude & mass. Only the chosen few have that rarified combination of success indicators, together with the tipping point of magnitude, and mass. It’s so extraordinary (yet our media makes it seem common) to be at the altitude and clearly likely to continue flying higher – faster. 3 out of 100 get there!!!!!

Without achievement of magnitude and mass a startUp turning down an offer is not as Graham suggests – “they have balls” – it’s because they’re STUPID and naïve.

So few startUps have a lock on their category, their control, their expectations – they’re out of their minds if they don’t bail when given the chance. The numbers scream GET OUT! Indeed that’s what the numbers say.

So the moral of this article is that most startUp content is about what we’d like to read not what we need to read. Who wants to hear about the 90% who didn’t get funded. And when someone does get funded who wants to hear about the 70% of those who don’t make an exit.

Reading about venture capital home runs is compelling stuff, but it’s not the way 97% of startUps should or have to run their business to succeed.

Thanks to Keith Erickson, Corrine Wyard, Alex Magary, and Janey Levine for reading drafts of this.

1. Ideas are a dime a dozen.

2. No barriers to entry - almost everyone can do it.

3. Can’t grow large enough.

4. There’s no way to get out of the investment.

5. It’s a good idea you’re not the right person.

6. Most angel investors are not partners.

7. You’re not prepared.

8. Not enough progress.

1. Ideas are a dime a dozen.

There’s a pretty big misconception many saddened entrepreneurs looking to raise money from angel investors realize - AFTER they spend a lot of time, effort, and aggravation getting there. Investors don’t pay for thinking. They pay for doing.

If you’re coming around with just the idea for a business you’re going to get almost nowhere. Even if you have a phenomenal plan that’s detailed and displays lots of credible evidence you’re not likely to get anywhere.

Of course there’s exceptions but they’re so incredibly infrequent. Very senior people leaving the corporate world can circulate a memo describing their new endeavor and possibly succeed. Inventors and scientists who have well thought out plans may succeed. BUT EVERYONE ELSE WON’T.

Unless you’re inventing something that is leaps ahead or yet undiscovered or undelivered (read: energy, biotech, science) ideas can be exciting - they can create interest - but you’re not going to get a check.

In most industries there’s an abundance of ideas and a lack of resources. Furthermore lots of great ideas run into a meat grinder of objections that have nothing to do with the idea but all about its distribution, market size, uniqueness, timing, cost, etc.

So, if you’re starting up a company and you’re not really doing it - but you’re long on thinking about and describing it - strike 1.

2. No barriers to entry - almost everyone can do it.

You know people will like what you can do. You perform as well, no even better than most people. You know you can grow that business - if only you could get the capital. Well if the only thing keeping you and every other resident in the world from starting is the capital - well - sorry - but you don’t have a business.

Uniqueness is a key characteristic investors will pay for. The more interesting and UNIQUE the more you’ll get. Very interesting but highly available won’t get you anywhere. So you have to demonstrate that unique elements in your attack, your business, will propel you to be a success. If you haven’t figured out what those are. Get that done before you waste a lot of time.

3. Can’t grow large enough.

Let’s say you can really build a business. Truly.

Now to get investors - have you thought about how large your startUp really does need to be to get angel investors to write a check? No? Well lots of startUps don’t think about that at all! Think about - it you’re pitching a service business - say a real estate broker or a unique consulting firm - how big are you growing it to - $5 million? - even $10 million? You’re not pitching you’re Arthur Anderson.

There’s two huge risks investors MUST discount your view - even if they believe you.

1. Success Discount - likelihood you’ll succeed. Anyone investing say 25%-50%

2. Size Discount - likelihood your forecast will be reached in the timeframes

So think about it. If you’re saying the company can get to $3M and be sold for $6M in five years, the investor is calculating say a 33% discount for possible failure, and a 20% discount for size & timing. What’s the new proceeds and timing after that math? $3.2M in 6 years.

Remember you can leave money in the bank at 7% for 7 years and double your money. And that’s safe. Who’s going to screw around with you for 4-5 times their money in 5-7 years. No way. Jose. The comparison in risk is astounding and the investment has to compensate for that compared to the safe harbor of a bank. So you need to be offering 5-10 times return to the angel investor to balance the extreme lopsidedness of risk.

So if you’re thinking you want to raise say $250k or even more from angels you have to see things structurally so they’ll stand up to investor scrutiny. If they’re going to get say, 7.5% of the fully diluted company and they’re looking for a 6x return (simple math) they need $1.5M of proceeds, meaning after they discount your success & size they need to END up at $20,000,000 sale. If their Discount is say 30% for forecast, and 20% for size you better be defining how you can sell the company for $40M when you reach your goals.

4. There’s no way to get out of the investment.

If you build a company there’s four finite dispositions.

1. the company dies.

2. you manage the company eventually seeking public funding as an IPO and liquidity.

3. You get acquired and liquidity.

4. You have little liquidity and investors can’t get their value out of the ongoing enterprise - although you could be paying ongoing, even large dividends - but we’ll ignore that (it’s a fantasy hypothetical).

Most companies today would pick #3 - Acquisition. And if that’s what you’re going to pitch - you need to identify whom might be interested in buying your company when you reach your stride. How could you partner with them as you grow - kinda like dating and then you get serious and they marry you. But you could have several dating partners and then get serious - upping the ante for those who continue to pursue.

Whatever you pick the angel investor has to believe they get their winnings from you succeeding at achieving that disposition. If you don’t know the answer or if they can’t see it or agree you got no way out.

5. It’s a good idea you’re not the right person.

The proper analogy here is college basketball. Men’s, women’s, makes no different it’s the same conclusion. You can be a real star on lots of college campuses playing basketball. Kick ASS! But when the conversion from passion to money is required most of the players are not part of the group that make the real dough. So what happens - some ungodly number of players don’t further implement what was a great thing to do until that point.

So what do you do if you really, really want to continue playing. You have to become or build a team that puts you in the right role. Maybe you need the top creative person, or even a CEO, or a CFO, Chief Scientist. Who cares! If you can’t get the idea off the ground within your sport and make into the majors you gotta figure out who can and get them to join you.

6. Most angel investors are not partners.

Lots of start ups seek out angels based upon their familiarity with the very business they’re starting. And in many cases they assume the potential start up angel investor is going to want to really dig in and help out in ways. Now you really don’t want the old coot around - but your pitching to what you’re assuming.

You’re WRONG. Most angel investors that can write a check don’t want to spend all their time helping you out. What they do want is for you to be very successful so that 1) they can brag and kinda hang around and 2) make a lot of money. They don’t want to really connect you and they don’t really want to work and they really don’t have any phenomenal expertise or insights to lend.

7. You’re not prepared.

You’re in front of the angel you’ve been stalking. You’re excited. You got them excited. And then things start to fall apart. How come?

Most businesses anyone would want to invest in have some level of complexity to get them going - if they didn’t everyone would start them. So when you’re conveying a lot of information you need props - you need people to be able to see what’s in your head and get it into theirs.

You need to know what you’re talking about too. You don’t need to know every tiny answer - but you do need to know almost all of the big ones and most of the small.

You need to know how may customers it takes to meet your forecast, where they are, what they buy now, how you’ll find those customers, and sell them at what price. You need to know the size of the market and how fast it’s growing and who the competition is, and where and what they sell, at what price. And there’s lots more you need to know.

So look - if you’re gonna pitch angel investors for your startup company - then you really have to know what the hell is going on. You have to be an expert and you have to let people know you’re an expert by demonstrating your knowledge. And you need to be right, and if wrong get corrected fast. Would you invest in a dummy?

Be prepared.

8. Not enough progress.

Hey. Let’s make this easy. Say you dropped by and after we chit chatted a bit you started to pitch me about this business you were starting.

Now let’s say we talk for a ½ hour or so and I look interested. And you’re getting about done with the pitch. And I say “Well show me this gadget you’re going to make millions with.” And you tell me “I haven’t built it.” And I say ” Well you got a great team ready to work with you. Yes?” And You say “I have some ideas for people but no one yet.” And I say “You must have some people lined up to buy this. Don’t you?” And you say “No. Not yet - I really haven’t approached anyone yet.” And I say - “I have to get up early tomorrow. So let me think about this. Call me.” And you leave.

If you’ve got nothing going on in the physical world in which we live and feel and touch objects. Then unless all of the product is intellectual property (read: energy, biotech, science) - unfortunately - you’ve nothing going on and no reason for angel investors to invest in your startUp now. Would you?

Investors of all kinds, angel, venture capital, and even wall street love progress. Continual demonstrable, physical, impactful progress. Product progress, customer progress, testing progress, functionality progress, pr progress, everyone loves all kind of progress.

Trumpet progress. And if you don’t have enough notes - get going and get something done.

An associate named Marko made a post here. Marko is a veteran startUp guy. He spent 6-7 years at his first startUp practically from day one.

He grew with the company, through it’s first couple of years and 70 angel investors who financed millions of startUp dollars. He went through the “You can’t do that!” phase.

He went through the first acquisition offer for $7,000,000 that the company turned down, to instead do a deal with the first $2,000,000 venture capitalist. He was there when the next venture capitalist poured in $5-$6 million more.

He was there when the founder got lynched by the venture capitalist. And then of course he did the best he could under a new regime. Then he departed. Onwards and upwards.

He was a great trooper. Did and excellent job under grueling conditions. He got paid pretty well, and his income probably tripled, but he never really got what he expected, nor deserved. Nobody really did.

So this is the way he remembers it.

Sales

Development

Management

If you’ve been a part of a start up or you’re a part of one now what movies make up your startUp world? Check in and tell everyone else. It was fun stopping for a moment and looking at Marko’s view. It would be great to see others.

If a potential Angel investor is going to meet with you and listen to your pitch then the capital you’re seeking is yours to LOOSE.Angel investors have every reason on earth to not write the check. Make sure they have the Money, Understanding, and Belief. Be relentless. You’ll get the check.

1. Angel investors don’t invest when they don’t understand you, the business, and/or the deal.

No one you know or ever will know is just writing a check for a few thousand or a few $100k if they don’t understand what the hell is going on with your deal. So you just invented the chemistry of cancer. Yes? Who will understand that? Well angel investors don’t have to understand in your terms - but they do have to understand in their own way. In fact if they’re successful angels - they MUST understand in their terms and dimensions.

So the problem here is - how do you convey a vast amount of your expertise in a simple way? Simple and vast don’t usually go together. Be prepared. Make simple and vast combine through carefully created documents that achieve that purpose.

• No more than 20 page presentation.
• Forecast.
• Capitalization Table, Cap Table.
• 1-1/4 page Memo.
• Term sheet.
• Receipt (in case you get lucky).

2. Angels investors don’t invest when they don’t believe.

Who do you know that would write a check for any value in something in which they don’t believe. Now we’re not talking about your brother, or mother here. We’re talking about a third party person - someone you’ve never met before. If they’re going to write a check for $2,500 or $25,000 they have to BELIEVE.

So now you ask believe in what? Well there’s three key things angels must back to be believers.

• Angel investors believe in you.
• Angel investors believe in the product.
• Angel investors believe in the market.

3. Angel investors don’t invest when they don’t have the DOUGH.

The most important thing you can do is qualify the potential Angel investors you’re after. Lots of potential startup investors get pretty excited with cool things they see. They like being included - you know part of the group. But at the end of the day - so many don’t write a check.

If you spend all your time chasing investors who just don’t have the money and none of your time chasing the ones who do - how much are you going to raise? Zero. (see the Delta Effect - coming soon)

So how do you qualify - you gotta ask questions. Here are the top three questions to ask - and ask them pretty near the beginning. If you don’t like the answers keep the meeting short - if you like them a lot - do whatever it takes to close the deal.

• How much are you thinking of investing?
• Timeframe to make that investment?
• Have you invested in a startUp before?

Most of the dozens of startup people I have dealt with don’t understand how to get investment from angels. StartUps seeking investment are afraid that actually asking for a check will abort the very thing they’re about to request - angel investment . The fear becomes convoluted logic -

• “if I ask then I’ll be perceived negatively”
• “which will disrupt the likelihood of getting the very thing I’m about to request”
• “ergo - I will not ask”

So in a perfect inexperienced catch-22, startUps wait for the potential angel investor to offer to write a check and invest. Now unless you’ve invented sliced bread no one is just hopping up from the desk grabbing the checkbook and writing you a $25k check. So this approach is indeed a loser and a stalemate. You’re waiting for a positive reaction that results in an investment and your angel is identical to someone leaving a movie - satisfied or not - but done.

So how do you get the startUp investment without disrupting the likelihood? Well, you’ve got to change your frame of reference. You’re looking at the problem inverse to the way it really works. Look at it backwards from an assumed NEGATIVE conclusion - you never get that angel investor to write a check. THAT IS NOW FACT retrospectively. Therefore anything you did during your pursuit of investment, staying morally, ethically, and socially within bounds would not have produced the negative outcome. IN FACT reviewed in this simple way EVERYTHING YOU DIDN’T DO is what caused the negative result to occur.

HEY KEEP READING!

So if that’s the case the critical path items to getting any investment, whether from venture capitalists or angel investors, has GOT TO INCLUDE ASKING FOR THE MONEY. NOW! And any investor actually prepared to write a a check can’t be embarrassed or put off by actually being asked. REPEATEDLY. In fact an excellent test of a real startUp investor is ASKING FOR THE MONEY!

I founded three startUps, two with investors. The first startUp I bootstrapped with a partner and sold to ADP who later sold and it was again sold in 2003. The second co-founded with the same partner (acquired by) ate up $15M of investment, most of it from a famous technology billionaire. My third startUp I started alone and was funded in excess of $40M from big time venture capitalists.

YOU’RE ALMOST DONE!

In both investor backed companies Angels provided $1-$2M of investment. Although they were some $100k and even larger investors most were $25-$50k sized. So that’s 30-40 angels raised from per company! And if even 1/2 of the angels I met invested (which is crazy) that’s at least (35 Angels/50% close) * 2 companies = 140 ANGELS! I’ve pitched.I learned early on - they were real distinctions between serious investors and Newbies! And I learned early on - if angels were going to invest than any normal amount of cajoling - direct or indirect - would not sway their belief that they would make money by investing. In other words if they wanted to invest - asking them to or pushing for them to act soon or in a larger amount never derailed the successful outcome.

So - at the end of the day after you’ve done all that’s necessary to get the check - you either get the check or have a dead angel.