This blog has been a sort of historical diary of the making of Textfyre. My own purpose in its creation was to share the ongoing processes of developing a business from scratch.
Last week I attended a seminar sponsored by DePaul’s Coleman Entrepreneurship Center called “Meet the Angels”. I’ve been to quite a few entrepreneur events and they tend to be pretty lame. You know, no investors, a lot of lawyers looking for clients, and a handful of people looking for get-rich-quick schemes.
But the “Meet the Angels” event put on by DePaul was extraordinary. They had a panel of three angel investors along with another eight investors facilitating round-table discussions. There were about sixty people in attendance so the ratio of entrepreneur to investor was about six to one. I got a chance to pitch my business plan to five of them. There simply wasn’t time to get to all of them.
It’s interesting to interact with investors in that they see things very differently than you do. Me? I’m very passionate and engaged in Textfyre from a product perspective. They are engaged at a purely financial aspect. And they differ in how they track your plan.
Some will ask about revenue and if you don’t have any, they simply ignore you. That’s a tough line to draw in the sand, but you can understand that investors are looking for people with skin in the game. They equate revenue to proof of your mad business skills. Others will try to get to know you and determine if you’re the successful type. Does money seem to stick to you? And yet others look at things from a calculus perspective. They start talking about debt equity, warrants, conversion methods, buy-outs, pay-outs, and more.
In the end though, I only confirmed what I’ve discovered while investigating marketing firms. Customer validation is the key to getting checks written. This can be revenue based customers or it can be market test data. Either way, you have to show that your product has a real market, that you have proof that you know the market and how to reach it with consistent sales. This is the one thing all of the investors look for and won’t budge without.
One of the discussion topics I found interesting was about finding investors in the Midwest. One of the panel members felt strongly that, for whatever reason, people were far more conservative in the Midwest than on the west coast. I’m going to do some research and track angel investment groups in California. Being closer to the entertainment industry may also add leverage to Textfyre’s cause. Who knows?
The other thing that the investors firmly extolled…be imaginative. There is no one way to bring investors in. Look at partnerships, future customers, future buyers, look everywhere. Leave no stone unturned. Be aggressive.
I applaud DePaul on its ability to bring these people together. It was a great seminar and I would go again in a heartbeat.