Sunday, February 14, 2016

Startup: Your goal is NOT to win the Seattle Angel Conference

At the Seattle Angel Conference we hope to bring together 40 companies and 40 new investors to a 12 week process of engagement. On May 18th the 6 finalists will present and the investment group will vote on a winner. That winner will be selected to receive around $200K in an Angel Investment. 

The overly logical entrepreneur can be lead to the following calculation: If I am one out of 40 companies, then my chances of winning are 1/40 or around 2%. Why should I engage, when I have a 2% chance of winning. 

However, Your goal as a startup should not be to win the Seattle Angel Conference. 

There are several benefits to the conference for your startup, regardless of how far you are able to get in the rounds. 

First, there is nothing like a deadline to force you to work on some of the pesky details about your startup. Updating your gust profile, fixing your current financial projections, and reviewing your company narrative all are things that take a backseat to the urgent startup tasks of engaging with customers and writing code. By having a deadline , you focus on making a step forward with your materials you need for raising funds. 

Secondly, every company that applies is able to get feedback. Close to a dozen Angel Investors will read the profile and provide feedback on what they read. The further your startup gets in the process, the more detailed the feedback will get. This is a good place to start polishing your Angel pitch and materials before you go to other Angel Groups. 

Thirdly, Angel Investing is a relationship based endeavor. There is an opportunity for every startup and their team to meet with dozens of Angel Investors, who are very interested in talking to you about your startup. Take the time before and after each of the workshops and pitching meetings to make connections with the investors in the room. 

Forth, Angel Investors really prefer to invest in companies where they can see several data points about the company. Mark Schuster wrote a good blog on this entitled "Invest in Lines not Dots"

The multiple touch points made possible by the process, will give you a chance to demonstrate engagement, listening, learning and progress. This will help the Investors know more about how things work for you. 

Finally, when all the stars align and all the social process works well, the due diligence teams tend to fall in love with the company that they have been evaluating. They know more about that company than any of the others. When this works well, there may be a motion to create a second investment LLC and a new Fund will be raised on the spot. This is how while the Seattle Angel Conference has done eight rounds so far, it has invested in over 15 companies. 

So understand what the goal of each meeting is and prioritize the opportunity to build connections and demonstrate progress. 

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