November 17, 2008

The Angel Scoop

Hey everyone, here’s the maiden launch of my blog for FundingUniverse. This is my chance to rant and rave on the subject of Angel Investing: Trends, Deals, Happenings, Phenomena and Kooky Stories.

Where am I coming from?
You can check out my Web site at but please allow me to get this background stuff out of the way. I’ve put in 34 years of hard labor in start-ups, turnarounds and fast-growth technology companies. I work mostly with IT and BioSciences companies, investing in them, helping them find money and sometimes as a board member or advisor. I’m on the board of several angel groups, technology incubators and have advised almost 100 companies, and have co-founded several successful tech companies, and I am most proud of Knowledge Adventure, which we sold for $100 million in 1996. Soon after I was an early shareholder in Bill Gross’ Idealab, which quickly became the most famous tech incubator in the world, and recently has morphed into one of the most notable tech operating companies in the U.S. Idealab created Overture.com and sold it to Yahoo for $1.6 billion, and now runs a few dozen companies, among them the hottest solar company, eSolar, new automotive company, Aptera Motors, and robotics company, Evolution Robotics.

What me worry?
Okay, I won’t dodge the question. Worried? Well, just a little. How’s this economic disruption affecting angel investing and entrepreneurial companies? Well things are going to be more difficult… plenty. Right away, any borderline investor deals are probably going to get killed, and the deals that do get done will be at terms a lot more investor favorable. However, for those companies that have an oh-my-gosh, true competitive advantage in a large market that’s screaming for a solution, don’t worry, you’re still good. While many angels have pulled back or are waiting, there still are investors who need to keep their capital employed. I mean, even if billions of dollars of capital has been withdrawn, there still are tens of billions remaining that must be employed, right? In any event, I suggest you make plans to keep yourself busy now though mid-January, cause once we hit Thanksgiving, deal closings will be few and far between.

I like “Recession-Resistant”
There is no recession-proof. But no matter whether you’re entrepreneuring or investing, make sure your company does something truly important. No…wait, you better make sure it provides something that’s absolutely essential to the buying public. If it isn’t, go find a way. The next year or two may not be your best years, but they can be years that you survive and build. I call that recession-resistant, but you may want to look for satisfaction in simply getting by.

Question: What’s a word for high gas prices and the war in Iraq? Answer: Nostalgia
What I’m saying is if you look back six months, it looked like high gas prices and the war in Iraq were making our lives unbearable. Now… I betcha you wish those were still our big problems!




November 15, 2008

Meet the FundingUniverse Posse: Frank Poulsen

Name: Frank Poulsen

Title: Venture Consulting Manager, Investor Liason, Distance employee and king of diatribe.

Frank’s the grand poobah over the venture consulting arm of FundingUniverse. He makes sure our consulting is producing results for clients. He’s also the guy responsible for maintaining good relations with our investor network by catering to their every whim.

Frank currently lives in Idaho and works remotely. When we’re lucky, he occasionally graces the FundingUniverse headquarters in Utah with his presence.


What’s the biggest mistake you’ve ever made in business? I think the biggest mistake was taking the second job that I did, no offense to anyone in the car industry, but I have never worked in such a crooked and upside down business in my life. Thank goodness I got out of that.

What’s the best business advice you’ve ever received? “He who knows not and knows not that he knows not is a fool, shun him. He who knows not and knows that he knows not is a wise man, follow him”

Where did you work before FundingUniverse? I worked as a business analyst with an auto group in Southeast Idaho, previous to that I worked with a joint venture between a Venture Capital firm and a regional entrepreneurial center as an analyst and consultant.

What drew you to FundingUniverse? The excitement of working in the Private Equity industry, i have always been fascinated by it.

How will you help FundingUniverse grow? By ensuring quality consulting and new approaches to our work, this will help to increase our sell-ability as the word get’s out that we are truly the best in the industry.

What’s your favorite things about FundingUniverse? Of course the people. We have a great team of young accomplished professionals that work hard and play hard.

What has been the funniest moment at FundingUniverse? Well I would have to say that Michael Jones is a terminally funny moment, get to know him, you will see.

What has been the weirdest moment at FundingUniverse? I don’t think we should talk about that publicly.




November 13, 2008

Angels

 

This morning started with a great visit to a local Angel Group’s monthly meeting.  I always enjoy seeing companies pitch to investors and am especially intent on observing nuance, which tells so much about what the investors are looking for.  I would like to share some of those observations today that may help entrepreneurs gain a more intricate insight into preparation for a fundraising pitch.

Observations:

1.  Without fail the first question after every pitch was calculated to determine the details of the offering. i.e. pre-money valuation, percentage of ownership offered, preferred or common stock, liquidation preferences etc.  I will let you draw your own conclusions but I think this means it is important to the investors.

2.  The company that received the most interest did so in large measure because of the dynamic character of the CEO.  Though the business model, market, financials, deal, traction etc. was all in order, it was the leader that created the buzz.  I heard private discussions such as “I like this guy” and “This kid knows his stuff.”  Oddly enough, the CEO of this company was the youngest of the five presenting.  

3.  One particular turn-off to the investors was either the total absence of the CEO, which happened in one case, or when the CEO deferred to a present or not-present CFO for answers on valuations, deal terms, or financial projections.  In short, the CEO must be present and he should be able to answer all the important questions.

I will leave you to draw the conclusions hear. I think it sufficient to say that it is difficult to understand everything an investor is looking for unless you can get the input of someone who sees it all the time. (shameless plug)