By guest authors Irina Patterson and Candice Arnold
Irina: What about the angel-backed companies, what can they do to improve their chances of success?
Corey: Reach out and get some of the coaching that you were just talking about [I was talking about 1M1M initiative] I’ve heard of other groups that do similar things, so reach out and get some of that coaching.
If they can find a way to attend some angel meetings – I know it’s not exactly easy – but if an entrepreneur should have any connection into an angel group or into any kind of investment group, or where they can get into one of these regional or national conferences, or if they can be a guest at a meeting – I know it’s very hard to do – but if there’s any way where they can see the profits ahead of time, that’s always a huge advantage.
The most important point is, if at all possible, to network into the group that you want to apply to before you apply. If you have an uncle who’s in a group, a friend who’s in a group, a friend of a friend, a business associate of a business associate, however you can do it, through the fewest degrees of separation possible, you want to try to get the attention of some people in that group before you’re actually in the process.
So, when the screening process starts, you already have interested eyes on you and you don’t have to worry about your executive summaries or your application being the only thing to catch someone’s eye.
You want to get coached on how to write the best possible executive summary, it reflects upon your professionalism.
But really what’s more important is having that personal connection. So, go and try to make a friend of a friend who’s in the group and get a lunch with that person; you convince him or her you have a good idea, and then that person goes and tells a couple other people in the group. Then you apply, and it makes it a lot easier to get a presentation slot. It makes it a lot easier to go through the process when you have those in-house champions.
And the other thing is to try to be realistic about your projections and about your pre-money valuation. I have seen a lot of investors look at pre-money valuations that they, by instinct, thought were high, and they just immediately don’t pay attention to the deals just because of that.
I think that could often be a simplistic way of looking at things, but a lot of investors will immediately get scared off by a high-ish pre-money valuation. So, I always advise entrepreneurs to not shoot for the moon. It’s more important to get yourself into the group and get yourself into the process. You can worry about pre-money valuation later. The most important thing is getting in. I’m not saying they should sell themselves short or sell themselves for nothing, but I’ve seen some people be overly ambitious about their pre-money valuations, and I’ve seen it kill their chances.
Irina: Thank you, Corey. Great insights that also are in total alignment with 1M1M philosophy. I hope this conversation steers a few entrepreneurs in the right direction.