Angels among us
I’d like to get some feedback from anyone out there who has personal experience — or knows someone — with getting angel investment for a startup.
For clarity’s sake, an angel investor is an individual who personally invests in a startup-type business venture, usually with sums ranging from $50,000 to $1,000,000 (or more). This person typically has relevant business experience, can give powerful advice and can tap his own personal network for help. Here’s a more complete explanation.
I’ve read a variety of perspectives — some who say that the cost of venture capital is extremely high, that working on the business “on the side” is the best way to go, but others that have had clear success (eBay, Google, yeah, yeah, you know).
Talk to me if you have any insight at all.
April 3rd, 2006 at 10:42 am
Not sure if I have any clear insight, but a couple of things to keep in mind:
1. The big question is around timing. The further you can push back the need for outside capital (like VC), and the more you have proven that you business model works, the better it is for you. Many of the successful companies you see today did raise venture money, but later in their evolution.
2. VC money is undoubtedly expensive (you’ll get general consensus on that, no matter who you talk to). However, the question really is: is it necessary. Despite the high cost, there are certainly startups that need this kind of capital in order to be viable.
Hope this helps. Good luck.
April 4th, 2006 at 7:00 pm
Thanks, Dharmesh!
April 5th, 2006 at 11:22 pm
Hey Scott,
Be sure you consider the connections your funding partner brings to the table, whether it’s VC or angel. With web apps, your capital needs are often really, really low. The technology isn’t very complicated, and you’ve probably already got people that can hack it.
The hardest part is marketing the sucker. A great VC will tend to be able to help you in this regard more than a great angel. They’ve simply got bigger networks because they look at more deals, engage more companies, and ultimately shake more hands.
If I were you, I’d be thinking less about who’s gonna take a smaller cut of the business and more about who’ll spend more time on your business and can make the connections that help you spread the word about Groupvine *fast*.
April 6th, 2006 at 1:00 am
I’ve been considering that very same thing — and growing the “Vine” is the most important thing that can be done right now. Good point!