Angel Fund

Willamette MBA

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How to Capture the Attention of People Richer than You

In the Willamette Angel Fund, we see hundreds of entrepreneurs over the course of two short semesters. Often, we can’t help but sympathize with them. These are people who have spent countless sleepless nights and double-mortgaged their family homes to pursue a dream. In fact, many of the students in our fund are entrepreneurs themselves. Yet, when we sit down to discuss a deal, we often decide whether to pursue it in a matter of minutes, or even seconds. Quick and fundamental decisions make or break even the best deals.

This is valuable information whether you stand in the shoes of the entrepreneur or the investor; or indeed if you stand in different shoes altogether. The speed with which we must sift through those hundreds of deals illuminates the challenges we will face as innovators, as well as the pointed questions we need to ask as managers. Knowing what questions matter ensures our time and resources, and those of our organizations, is well-spent. This brings us to our three simple rules of deal-review.

1. Don’t bury the lead.

Last spring, while reporting on a company from Seattle, a pair of students began by explaining the product — a multipurpose hook for use while camping. At that point, Professor Read left to refill his coffee, indicative of the overall level of interest in the room. Nonetheless, the students persevered — and eventually clarified that two million of these hooks had been sold through REI’s national distribution channel. Those of us still in the room were instantly riveted — and upon his return, Professor Read was aghast he had missed such crucial information. Investors are not known for their patience — when an aspiring entrepreneur buries proven revenues deep in a slide deck, most investors have long since stopped paying attention and gone for a cup of coffee. This takes us to our second rule…

2. Traction is always the lead.

Nothing is more valuable to a young startup than actual, paying customers. Until customers arrive with cash in hand, the business model remains in doubt. The reason is simple — a company is only as valuable to potential acquirers as the revenue it ultimately generates. When angel investors are looking for 1,000% returns, early traction is absolutely critical.

3. Where there is doubt, there is no doubt.

People like to brag about their own success. Skilled entrepreneurs love to highlight what makes them better than everyone else. If a founder has paying customers — they will tell you. If a founder is talking to national distributors — they will tell you. If a founder has a venture capitalist lined up for the next round of funding — they will tell you. If you have not been told that a given fact is true, it is almost certainly not. In this world, if you have reason to question an assertion, it is almost certainly not worth betting on. This is useful to remember in any business dealing. (And for you movie trivia buffs out there, the “when there is a doubt, there is no doubt” quote is attributable to Ronin, 1998).

Conclusion: Embrace Short Attention Span

As a matter of necessity, investors do not tend to be patient individuals. They are CEOs and managing partners whose time is worth hundreds of dollars an hour and billed in six-minute increments. They are used to short bullet points carefully tailored to what they most care about. If you want their attention (and money), they need to know upfront why they should care about what you have to say.

Don’t bury the lead.

Traction is always the lead.

Don’t leave room for doubt.

 


Nathan Foos

Nathan Foos is an MBA/JD candidate at Willamette University, and is an alumnus of the WU College of Liberal Arts where he studied history, mathematics, and economics. With a strong interest in the provision of capital to growing firms, Nathan has actively engaged in the experiential course offerings at AGSM, including the O’Neill Student Investment Fund and the Willamette Angel Fund. In particular, Nathan enjoys angel investing because he can engage on a personal level with investee companies, obtain real-world insight into a plethora of industries, and learn from the mistakes and successes of hundreds of startups.

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