VANJ (4/18/06) Event Recap

by mike on April 18, 2006

I attended a VANJ event this afternoon. The topic was “What Does It Take To Get This Angel Investor To Write The First Check?” and featured Bob Gailus from Lenox Venture Partners. Bob is an experienced angel investor and has worked in the industry for over 20 years in both Silicon Valley and NY. Overall, I found the session to be informative and, most importantly, validated my assumptions around angel funding. In general, I wouldn’t even bother trying to get funding if I did’t have a product and customers already. It’s just to competitive. These guys get several hundred business plans a year and only fund a few. Not to mention most of the funding they do is from referrals in some way. What you really want is to have investors come to you (e.g. self-sustaining business). That’s in an ideal world. We all can’t be as lucky as eBay. ;) This is the challenge with consumer-focused internet businesses. That’s why the entreprise route is so attractive, but is a much harder way to go (in my opinion).

Anyway, the format was entirely Q&A which seemed to work well. Lastly, here’s Bob’s criteria for investing (paraphrased).

  • Is the market opportunity large enough to grow a $25-50M+ company?
  • Is there a validated market need?
  • Is there unique technology that differentiates the company?
  • Is the “go-market” strategy compelling?
  • What are the market adoption issues and timing?
  • Can the company be a dominant player?
  • Does the founding team have the right background?
  • Are the founders open to working with investors?
  • Is the capital requirements sized to the opportunity?
  • Will be the company be a compelling acquisition?
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