[Discuss] Startup?

[blu at nedharvey.com (Edward Ned Harvey (blu))]

> From: Discuss [mailto:discuss-bounces+blu=nedharvey.com at blu.org] On
> Behalf Of Steven Santos
> 
> Have any of you ever pitched a big idea to an angle investor?
> 
> Any advice for pitching such a big idea?
> 
> Where do you find an angel investor for such a thing?

This is something I now have a lot of experience with.  My advice would be first of all, be careful what you say to anybody - The biggest surprise that hit me out of *everything* was the patent process.  At some point, you're going to need to patent stuff, and anything you disclosed prior to filing for the patent, is potentially at risk.  The US has just about the most lenient laws, where you're able to patent something up to 1 year after public disclosure, but generally speaking worldwide that is not recognized, and not a valid practice.  Generally anything you disclosed prior to patenting becomes unpatentable.  You're going to need legal counsel for incorporation - I have two good references I'm happy to pass along off-list - both are likely receptive to working on credit - allowing your bills to pile up until such time as you're funded and able to pay them, because they know the fastest way to destroy your startup is to demand you pay their bills straight away.

Reach out to all your friends and contacts, get all their advice.  Become comfortable with having everyone sign NDA's so you're not publicly disclosing anything.  Get your form NDA from your legal counsel - because if you download from the internet, there are lots of different ones that are valid and invalid in different regions.  

Understand that all your friends & contacts are going to give you conflicting advice.  That's not the point.  The point is, when you pitch to investors, *they* are also going to give you conflicting advice.  Every one of them tell me "what investors are looking for" and none of them say the same thing.  By talking everything over with all your friends & contacts, you're going to build up buzz, and they're going to surprise you with the contacts they can introduce you to.  By getting more exposure to them all, you'll be more prepared for each one.

Carefully manage your exposure to investors.  They are thick with each other, and nobody wants to feel like they're getting "seconds" on a deal that they've already heard about through some colleague in a different group.  Ultimately, you'll *need* one or more of them to personally advocate you within the group.  Your chances are *much* better if you can get personal introductions rather than cold approaching them.  All different people are going to give you different advice about how to find and approach potential investors - Attend groups like Venture Cafe, and Ycombinator, and MassChallenge, Boston New Tech...  And a bunch of others...  Go attend those groups before you're ready, just so you can see what other people say and see what they present, and see what peoples' reactions are to them.  You'll be improving your own personal skills just by interacting with the community.

Be prepared to share some stake in the company to whoever advocates you.  It is very common practice.  Talk to your lawyer about what's legal and what's not; there is a fine line.  You need to be careful what you say and how you say it - especially in email.

Do everything you can to generate buzz.  Present at meetups and conventions, etc when you're ready.

Try to find some mentors who have been through this sort of stuff before.  One of the best things I did was to do an initial Friends & Family round of investment, in which, a handful of people I knew invested - and surprised me with the amount of knowledge they're able to contribute.  I send out regular status updates and solicit their input, and anytime I have to make tough decisions, I call them up and discuss.  Not only do they have valuable contributions to make - they have a stake.  You'll often hear the phrase "Friends, Family, and Fools," because naturally a lot of people doing this will not be very well qualified.  But if you do it right and get some knowledgeable people on board, it can be valuable.

Oh.  Definitely read this.  It helps a *lot* to understand how you should be incorporating and who/how to invest.
http://www.sec.gov/info/smallbus/qasbsec.htm