August 25th, 2011 → 10:44 pm @ Norman
Several of the companies I’ve invested in have missed their sales targets and are chasing follow-on funding right now. The Boards have different problems and different approaches to their situation:
Company A has failed to get its product sold in the market, and lost the confidence of some investors. The Board still believes in the business’s future, and has explained to shareholders that they have a new strategy for entering the market. Still, the shares are being offered at a heavily discounted price, reflecting the company’s failure to date.
Company B also got into trouble in the market. In their case, some poor management, compounded by a large European partner going bankrupt left them out of cash and without a significant sale. The Board hesitated to ask investors for more money to back a relaunch. Instead, directors worked for many months to find a new way to leverage the company’s intellectual property… and removed the managers. They now have a new story for investors but have had to heavily discount the shares for the new round.
Company C lost both of the two main market opportunities they were chasing. In each case the deals were lost at the end of a long sales cycle. But, unlike Companies A and B, Company C had continued to develop an impressive sales pipeline, lodged extra patents, built a strong team, and achieved a surprisingly good brand position (for a startup with no sales!).
While Companies A and B are begging investors for more money, Company C is able to say, “Well, we missed our sales goal (and are hence out of cash), but look how strongly positioned we are!” Company C is delayed, but still on track, and investors will still be asked to fund at the rate of the previous round. (more…)
January 25th, 2011 → 8:58 am @ Norman
The founder and I entered the boardroom where the Angels were waiting for us. We did introductions, and the founder started his pitch. This founder is good at pitching, so I didn’t have to say much. I spent most of my time observing the Angels. One of them was very aggressive. He used all the body language and verbal signal games that men display to establish dominance (aggressive questioning, interrupting, finger pointing, and so on).
I briefly imagined him as a gorilla, bouncing up and down with bared teeth, and shrieking at the founder… ok, it wasn’t quite that bad. But he was definitely making a power play. (more…)
September 28th, 2010 → 11:26 am @ Norman
In the last couple of weeks I’ve met several times with a client who’s about to do an Angel funding round. Like most entrepreneurs, he values his company based on its potential rather than on what it’s actually delivered.
He points to the enthusiasm with which his product is being greeted by key players in his target market, and to his worldwide patents. I point to the fact that he has not yet got his first paying customer. He enthuses about the scalability of the business, while I highlight the risk factors which stand between him and success. (more…)
September 13th, 2010 → 8:10 am @ Norman