Angel InvestingPresented by Roger London

American Security Challenge

Background

$1B

Serial Entrepreneur #6?

Dept of Defense and Intelligence Community Tech Scout

Dingman Angels, Baltimore Angels

Startup America/NYSE, Wal-Mart, GE, Coca-Cola

NOKIA Venture Capital

Techstars mentor and partner

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Fundamentals?

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IgnoreCustomers

Poor ProductNot Right

Team No MarketNeed

14% 17%23%

42%

Startup Failure Not Right Team

Poor Product

No Market Need

Ignore Customers

Top 4 Reasons Startups Fail

Red Flags

1. Market share based on % of total market

2. FF&F terms not angel friendly

3. Use of Proceeds pays salaries or debt

4. Send unsolicited plans

5. No competition

6. NDAs

7. Polishing the cannonball

8. Bury the headline

9. Relatives/friends on team

10. Muddy IP

Soooo, what should you do?

1. Clearly defined benefits and differentiation in scalable business

2. Get customers pilots/traction/involvement early*

3. Show exit possible

4. How are you going to make money!

5. Traunche milestones

6. Team examples of success

7. Valuation

8. Clear, concise and compelling- 6th grader *

9. Forget crowdfunding

10. Profitable, repeatable, sustainable, scalable

Startups Hurdles Race Theorem

1. Distance: How long is the race…100 meters or mile? Is start to exit in

5 years or 15?

2. Number of Hurdles: is this a 3 hurdle race or 10 hurdle race where

hurdles include factors like raising capital, finding talent, raising

capital, creating demand in new market, manufacturing, raising

capital, distribution, etc.

3. Hurdle height: are these hurdles easily crossed? Need 100 customers

or 1M to break even?

4. Purse: playing for pile of pennies or pot of gold?

Bonus: from Driven Forward

1. Dumb money

2. Kiss of death advisor

3. Misspent effort

4. King of the dung hill

5. Build to buzz ratio

6. Seem uncoachable

Bonus: from Jitha Mithra

• It’s one which sounds plausible, but is actually bad

Startup Ideas

Plausible Startup Ideas

Good Startup Ideas

How to save yourself from a bad startup idea that looks good

Bonus: from Jitha Mithra

Narrow and deep vs broad and shallow

• You’ve got to create a product that at least a few people NEED, not one

that a large number of people WANT.

• A “painkiller” vs “vitamin”

Instead of focusing on cool things people could use, try and solve a real problem

Bonus: from Jitha Mithra

If the problem you’re solving is not one of your customer’s top 3 problems, its not important….its a nice to have

Version 1.a Solving a problem people don’t know they have

Version 1.b The product solves everyone's problems…..you end up solving a problem for no one

Bonus: from Jitha Mithra

Templatized business models

• Uber for lawn service

Incremental business models

• Uber with Wifi

Cloning an existing player but in adjacent market

• Uber for water taxis

Bonus: from Jitha Mithra

No Competition

• If no competition, maybe the market is unattractive?

• Lack of thorough research because beautiful baby

Bonus: from Jitha Mithra

MVP requirement

• Build and test an MVP version with user/customer interaction

Roger London, President

S3 Innovations

AmericanSecurityChallenge.com | TechMATCHs3.comEmail: Roger@AmericanSecurityChallenge.comFollow Us: Facebook | LinkedIn | YouTube