How to Find Funding
Updated: Jun 12, 2019
Without Wasting TIME
I have been working in the startup space nearly all of my life. I started my first company shoveling snow at the age of seven. I road a skateboard to E.F. Hutton downtown in Lansing, Michigan when I was eleven and went to the local public library to read annual reports when the markets closed. I had dreams of someday having a publicly traded company on the New York Stock Exchange and ringing the opening bell. I always knew where I was going, but I never knew exactly how to get there.
Venture Capital is the path for many companies. It’s a step towards going public, taking over a market or being acquired.
The problem is that most don’t have a “golden ticket” and so they’ve likely already failed before they board the airplane to Palo Alto, Seattle, Denver, New York, or any of the up-and-coming cities that are trying to compete with Silicon Valley. The reason they’ve already lost is because not only are the venture capitalists looking for reasons to say no, for reasons they don’t share with the startup team, but also because the VC are afraid of two things:
· making the wrong bet on a company that loses and having to answer to the investors in their fund, which makes it harder to raise the next fund
· missing a bet on a company that turns out to be a huge winner
On the first point they limit their chance of making a losing bet by going with known quantities as much as possible. This means either choosing someone with a “golden ticket” who has had a big win in the past, or whom they know from college ties, or another VC is recommending the team or founder. The VC who refers the company is now risking their own reputation and it’s the first oyster eater principle where if other smart people are making the bet and putting their reputations on the line then it is a safer bet. But the pool of smart people reviewing the deal is VERY small and they’re playing God with other people’s money, which means their own reputations are on the line each time they say yes.
The first is obvious but the second is called Fear Of Missing Out (FOMO), and leads the VC to tell the company that what they have is interesting and that they will think about it and that the startup should keep them posted. Rarely will they outright tell a startup team that the answer is no. This wastes everyone’s time and the startups dimes. They keep hoping for a call and they keep spending time chasing instead of building. Raising capital is expensive.
In fact TIME is our most valuable asset because no matter how much we invest we never have more time, only less. Time is expensive and is often not factored in to the cost of raising money. Time to market can create huge network benefits that you miss when someone else gets there first. Time is a killer or helps you win. Time is incredibly expensive and valuable.
Of course, if the company already has traction and is looking to play capture-the-flag even better because their need for cash is based on known ROI and market growth they’ve already proved.
At AngelTrades we are growing a national market of anonymous, private, invitation-only, accredited/angel investors who can review deals from each state nationally. For this we charge a small fee for review, then a listing fee. When a company receives their funding we provide investor management for a small interest in the investing fund and a small amount for operations and management, which is far less than what broker/dealers charge.
We partnered with Assure.co, who have helped facilitate more than $2.35B in these Special Purpose Vehicles, which invest in a single opportunity and there fee is also very small and covers the opportunity for up to ten years. All of this provides TIME back to the company to focus on what they do best.
We also look for companies with a low risk-to-reward potential outcome, but we don’t require companies to fly from their home state to get listed on our platform.
Since we help these companies with document creation and presentation, and because our former SEC Commissioner attorney and his 150-year-old DC law firm are available to provide compliance guidance.
We help companies get in front of potentially thousands of interested investors for less than it costs to fly a team to Silicon Valley, pay for hotels, food, the value of the TIME it takes to do that, and it means the team won’t have to make repeat trips away from their home state and they can focus on growing their company.
My goal for AngelTrades is for investors to find great deals from their desktop or mobile device, and for companies to find the funding they need by listing on our platform at AngelTrades.com. We have a list of requirements of a company, and this list isn’t just to filter out companies that won’t get funded through AngelTrades, but to serve as a list for companies on what they need to do to get funded by anyone.
John Wright Gotts - AngelTrades