Raising Money
For 10 Years, Angels Den has been founding companies around the world. 9 years ago we opened up in Singapore, 8 years ago in Hong Kong, 4 offices in Mexico, 2 offices in Germany, another 8 offices….but who cares! One of the things I am really concerned about is for ecosystems such as Korea where one of the most important things people think is one of the most difficult things they will do… going for funding. But let me tell you, raising money is actually quite straightforward in this day in age. There is more money out there than you guys can ever see.
Angel’s Den Sees 400 Angels a day
Angels Den has over 22,000 business Angels, each of them accredited, each of them with roughly $450,000. We see 400 of them a day. Getting funded is not easy but it is not the most difficult thing you are going to do.
200,000 business plans…..that is a lot of business plans in anyone’s world, but what I am looking to do is tell you why those got funded and why most didn’t get funded and there are a lot of lessons there that people can learn.
So to condense down what Angels Den believes is relatively straightforward, what we see is that far too many companies look for funding far too early, far, far, too early. I think as a summary of what it is that we are looking to do, I believe there are 3 things that you absolutely NEED before you even think about going for serious funding.
1) A proven business model
What do I mean by that? Sales. I am saying that out there if you have a startup and you haven’t sold anything yet then I have a word that describes you…that’s called an idea. These are Business Angels, these are not Idea Angels. Will you find stupid people to invest? Yes, you will…but do you really want stupid money on board?
If you haven’t proven your business model that is you actually haven’t SOLD anything yet, then it is not in YOUR best interest to go searching for equity funding from an Angel.
Just to explain what equity funding is, let’s say I give you $100,000 and in return, you give me 20% of your company. The most difficult thing you will do in this business is to sell something to someone that isn’t your mom. It is the most difficult thing you will ever do and I understand that. There are a whole lot of that needs to be in place for the product, distribution, logistics, marketing, and your team. But if you go ask for funding BEFORE you have sales? You are going to have to give away a much larger equity stake in your business to de-risk it for a sensible investor. Why would an Angel look to invest if there are no sales unless the investor is willing to take a very big risk? IF he is willing to take a very big risk…that tells you something about that investor.
But often getting the money on board, will just help you hide the problems in your business, its dumb of you to go looking for money before you actually got to that stage.
2) The humility to accept that you do NOT know it all.
Secondly, in terms of what you need BEFORE, you go into funding, and this is a difficult one for entrepreneurs. You have to have humility…you have to have the understanding that you do not know all. If you think you know everything…you will fail. What you will need is some help.
3) Purpose
You have to have your purpose in life. If you are not passionate about what it is you are going to do, once again you are going to fail, 100%. Entrepreneurship is sexy, entrepreneurship is really exciting, everybody wants to go into it…BUT…if you are not willing to work 14 hours a day, if you are not willing to work on weekends, you are going to fail. If you are not passionate and you don’t have your purpose in life, it is going to be really difficult to motivate yourself to get there.
