A VC in Vacationland

Well, I really do like Special K with strawberries in the morning, but the “serials” I am speaking about here are serial entrepreneurs.  These are the people who have either done a successful startup or somehow acquired the knowledge to do one.  These are the people I like to invest in as they know what they need to do to be successful.

So many of the first time entrepreneurs I encounter need a lot more help and advice than a typical angel investor or especially VC has time to give them.  Often, they get frustrated when the investor says: “No money until you figure out what you need to build to be successful”, or some such variation on that theme.

Let me offer a few words of advice to the first-time entrepreneur to help overcome investor skepticism:

1. Have real products and real customers.  First-time entrepreneurs will find it nearly impossible to attract any investment without a working product and some initial clients.  The product  does not have to be anywhere near complete, but complete enough to attract some respectable customers, even just alpha customers.  Few investors are going to bet on a set of PowerPoint slides from a first-timer.
2. Attract a group of reputable advisers. Investors, lacking evidence of your prior success in this space, want to see  world-class professional who have worked in the space for a long time, have good networks and are capable of helping the entrepreneur figure out how to be successful. These advisers can be given an equity stake in the company in return for their services.
3. Get professional management on board.  Unless you were a CEO/COO in your prior life, devote a chunk of founder equity to attracting leadership for your startup.  You cannot usually pay them up front, but many retired or semi-retired executives will work for equity.  Be sure that the executive has experiences in and successes in the relevant industry for your startup, e.g., software.

It will be difficult for the first-time entrepreneur to get to first base with investors if they do not have the above capabilities in place prior to funding sessions.  Increasingly, even angel investors want a more complete package from the first-time entrepreneur than just a deck of slides, not matter how intriguing the idea.