I had a very interesting conversation with many of the GOAP members when they were in Bangalore over the last few days. After 10 days in India, they had heard from over 150 founders, entrepreneurs and had multiple perspectives on what’s the startup scene like in India.
A couple (Paul Singh, I’m looking at you) of them really pushed me to fund more companies in India, mentioning that most entrepreneurs said angel investors were a) far and few between, b) were offering onerous terms (i.e. 35% for $250K) and c) were taking too long to make decisions.
As an entrepreneur I can relate to the feedback. There are very few “good angel” investors in India since angel investing in India is relatively new. There’s a lot of education required to get angel investors to understand the risks, rewards and objectives of investing. I do have another perspective though, and I summarize first.
Fred Wilson on “How much to burn…”.”Basically he and Dennis worked for nine months without any pay and built V1 of Foursquare all by themselves for basically no money other than their time which they were not charging the company for.”
Basically the point I want to make is “The bar has been raised dramatically for what gets funded even by Angel investors“. I want to make sure entrepreneurs internalize this.
1. If you are looking to get funding for an eCommerce company, please dont tell me “We spent the last 6 months building the platform and now are going to start getting transactions”. Show me 3-6 months of transactions trending up and to the right. I get 3-5 of these types of proposals every week. Nothing different, in any of these plans except for the category they picked.
2. If you are building a Saas application, show investors the working prototype instead of a PowerPoint of the screenshot. Share the daily unique visitors, # of free trials and # of converted (hence paying) customers.
3. If you are building a iPhone / Android / mobile application, let us download the app, play with it, instead of sending us a Balsamiq screen capture. Show me how many downloads have already happened, how my users are actively using it and what your approach to building the app(s) is going to be next.
Like most of you, I have a full time job. I unfortunately dont have the time to evaluate every plan that is sent my way. If I see traction, then I can even spend some time to evaluate the company. In the absence of that I have to go with how well we know each other.
P.S. I dont like to invest in certain sectors – I dont like the education vertical (have not figured out where in the value chain you can make money), healthcare (overall), real estate and anything related to radio, TV and news media.
I would love to invest in more entrepreneurs, but I just dont have the time to learn and do due diligence, since this is not my full time gig. If you can please help me out, with more effort on your side, then it makes the process easier for us both.