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1M/1M: How We Will Interface With AngelList

Posted on Monday, Apr 4th 2011

In our recently concluded interview series with AngelList cofounder Naval Ravikant, we discussed how AngelList and 1M/1M will be interfacing. Below, I am synthesizing the discussion.

AngelList gets more than 7,000 deals a year at this point, and this is sure to increase over time. According to Naval, more than 95% of these deals are not ready for funding. At 1M/1M, we focus on very early stage entrepreneurs, and whether you want to apply to AngelList or to an incubator like Y Combinator, TechStars, or DreamIt, we focus on getting you to the point where your chances of success are significantly higher.

So, let’s review what AngelList is looking for.

They evaluate entrepreneurs on four specific vectors: team, traction, social proof, and product. Given the size of their deal flow, it is not easy to get attention and visibility on the AngelList network without what they call “social proof,” so you need to understand what social proof is from their vantage point.

Simply put, social proof is an indication that someone whose judgment they respect has evaluated the deal, talked to the entrepreneurs, and is willing to endorse the company as legitimate and worthy of investment consideration.

From the 1M/1M point of view, as you know, we do not recommend any company for investment until there is adequate customer validation (=> traction), business model validation, and pricing model validation. In addition, we do not like to recommend deals to investors that cannot attract at least $2 million in pre-money valuation. That means you need to have  a product that real customers are willing to pay for. We spend a lot of time and energy coaching you on issues such as positioning, go-to-market strategy, customer validation, business model, pricing model, channel strategy, and so on so that by the time you go try to raise money on AngelList (or sit across the table from an investor), you will have thought through all these issues, and present yourself as a more mature company, rather than present just a haphazard deck of slides with minimal strategic roadmap.

AngelList knows this. So, if you are a company referred by 1M/1M, you will automatically get credit for a certain level of validation and maturity. However – and here is the catch – do not use 1M/1M as your “social proof” point unless you have first talked to me and gotten me to agree with using us as your “advisor,” because AngelList will send me an email asking me to confirm that I have indeed looked at your business and am endorsing you. Also, just attending 1M/1M roundtables or even pitching at those do not warrant that you can use the 1M/1M brand as your “social proof” for AngelList.

The interface we’re creating between 1M/1M and AngelList is for our premium members only. We do thorough due diligence and deal screening before we send you over to investors. We’re not interested in sending you into situations where you are bound to get beaten up and sent back with a long face.

Now, the premium members will not only be able to use 1M/1M as endorsement (you still need to speak with me and we need to agree that you are ready); we will also help you create additional social proof and traction points. Where appropriate, we will help you to recruit advisors and team members and get you PR, analyst, investor, customer and channel partner introductions. In other words, we will connect as many dots for you as possible, such that by the time you go face investors, your chances of succeeding in this incredibly low probability game is considerably higher.

But, please understand, you will need to put in the work on your end to learn and follow the 1M/1M methodology. And if you do, you can think of us as a prep school for AngelList, Y Combinator, and an entire range of other possible resources that you may want to access as stepping stones toward a successful entrepreneurial journey.

I hope this helps, and please feel free to ask whatever questions come to mind.

Related Reading: 1M/1M: The Curriculum

This segment is a part in the series : 1M/1M

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