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CZ LOOK 8.3.2012 TechHUB Why Angel investors are not Democrats, but Experienced Powerful Partners !

CZ On 8.3.2012 was in TrecHUB couple presentations from Angel and Venture investors. I will try to use parts of this presentations to demonstrate then , Angel investors are not Democrats, but Experienced Powerful Partners.

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CZ ON 8.3.2012 was in TechHUB (which is in middle of reconstruction, opening Apr/20) interesting evening called " Day D in Reverse". Day D is Czech version of UK popular TV Show Dragons' Den or US S hark Tank

Based on numbers presented there and also my personal experience with start-us in early stage I will try to argue, then:

    Why Angel investors are not Democrats, but Experienced Powerful Partners

First is important to understand this important difference:

Venture Capitals invest with calculator, they manage money from funds = simply just calculate risk / profit ratio and control money spending.

Angel Investors invest with heart, they invest it’s own money in areas they understand and follow money with mentoring.  Angel Investors will prefer projects which can grow so they money can be paid off and ones which can grow globally, because time they can spend with their babies is limited. This is primary reason why Angel investors prefer to have few large investments which they can more closely mentor then many smaller ones.

Every Angel investor I met told me then there are much more money than investable projects.

From 100% projects Angels receive for evaluations:

-          50% are Dreams wit not real business or technical implementations (Idea)

-          40% are Visions where only one side technical or business part is finalized (Pilot)

-          09% are not Investable Project (In-mature Product)

-          01% are potentially investable Project (Scalable Products)

Reasons why Angels don’t invest in this PERFERCT 01% is then they can be over-evaluated, not have defined strong Angle exit time frame or they don’t match Angel preference about area of investment.

Many of 09% of not investable Projects are NICE Products which for some reason don’t scale:

  - Totally Unrealistic money generation model  (with now real backing data)

  - No Profit Model – make it HUGE and we will see later (fail on Where are my money? test)

  - Niche (too small) market (most projects which grow from somebodies hobby)

  - Local focus with no strong going Global strategy

  - It’s funny, but how you will sustain users in long term

  - No enough large team to support planned grow (or just part time project beside main work time)

  - One man show company (concept of Family business)

  - Niche (too small) market (most projects which grow from somebodies hobby)

======== Rudolf's Notes ======

Projects from 09% like “One man Show Company (concept of Family business)” are ideal target for “Friends & Family” investment.

Projects from 09% like “Niche (too small) market (most projects which grow from somebodies hobby)” are ideal for “crowdfunding” campaign.

For 50% visions stage best place is start up like weekends where Vision can be transformed in one implementable Vision.

For 40% Visions stage best place is some sort of Accelerator or Incubator program, however one such programs can take only few projects per year, this is from my point very critical (bottleneck) part of whole process. This group is most perspective, but is very difficult to work with them, many of them are very paranoid about sharing their ideas. This is also why they have crowdfunding !

PS: "just part time project beside main work time" is common issue in Czech Republic, many of us have families and house mortgage, we can't simply take a 1 year creative vacation :-(     

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DeletedUser

Yes indeed they are!! That's why we have to calculate their support on startups at later stage between first 600K investment and 2mil...

Angels are *investors* that means they invest for profit... not for risk...

American Silicon Valley Angel investors are regularly do bungee jumping and other extreme sports like investing in startups... Europeans don't... So, yes they aren't democrats... BUT WE ARE...

SO WE, WHAT WE DO FOR OUR PROSPERITY?

WE are the people that pay taxes, we are the people that we bail out banks, we are the people that on us is based Democracy... WE what we do? We wait investors to help us?

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DeletedUser

Hi Costas, you was this time faster then Me :-)