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What are your chances of angel investment?


Stashed in: 106 Miles, Angels, Funding, Awesome, Infographics!, startup, VC

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Interesting stats...

Which one resonates most with you?

I personally do not seek funding yet, but .... I do not know if I would publish this...,

the funnel looks more like a tight ass...:)

These guys are getting, on average, over 100% return, but only 33% even make it to screening.

It tells me, so many investors are not yet open to the new ideas. Investor community made a giant leap towards opening mind to the new ideas, but there is so long road ahead.

There are piles of money across the world, stashed on bank accounts or burned on wasteful lifestyle instead of helping entrepreneurs find the new business model, which will make the world better.

That is so true it bears repeating:

So many investors are not open to ideas.

There's a lot of money out there, but it's still exceptionally hard to raise money.

Well and here is the problem with this... nobody likes to loose money. Which is correct...

Right now, if you invested in failed venture the money are lost...

Which is only half way true... Failed ventures are not completely annihilate.

Teams are built, skills are developed, connections are made. Failed ventures develop new capabilities, which are hard to measure and manage.

One can argue, failed ventures is like a fire in the forest, while it burns some trees and kills some animals, it actually beneficial for the further growth of the forest.

I think, eventually, there will be the new financial model, which will account for the benefits of failures, relax the tightness and open minds.

more popular = less invest-able isn't a mystery. too much competition for a limited resource always results in an exodus because the one undeniable ground truth is that there isn't enough to go around. i think that this is a shared problem space. Not only do investors manufacture/buy into the feeding frenzy but entrepreneurs who are in this situation are either spending too much time playing the field/hedging their bets/uping the ante or they are unclear about or lacking in a clear set of selection criteria for the types of people they want to partner with. Both of these send negative signals/messaging out to the investment community about integrity and execution/decisiveness as well the lack of a clear identity based on a core set of values that drive these decisions. Ultimately, investors pass because they either figure they don't have a chance or they see the entrepreneur as lacking in strong leadership. As with many things in life, timing is everything.

Basically, the 3% chance of getting an investment is motivated by the fact that only 1 in 5 of those investments will return capital, and only 1 in 10 will return 10x.

They think that by being choosy they can increase their odds of picking 10x's.

There's probably no data that says if their chances are better by picking at random.

There have been "monkeydex" experiments that show that a monkey randomly picking public stocks regularly outperformed mutual fund managers. I suspect that private picking might yield similar results.

the first year i had a fantasy football team i hadn't had the luxury of getting wrapped up in the stats of players for over 10 years -- unlike the 9 other guys in my league. my brother was the commish and a rabid football fan (go packers!) and we were at my mom's house two days before our draft party and i was really clueless about who/how to pick. my brother threw down one of those magazines they print out for FF drafts with all the rankings and stats. it was just too much data too soon before the draft. so i said out loud, i just think i should use a different set of criteria to pick my guys. and my mom - who has only ever followed sports if one or both of her children were on the field - said, well, you know, that team has a really nice shade of purple in their uniform. so, we picked all of my team's players based on our favorite colors.

and until the moment that donovan mcnabb went out with an injury... i was leading by a huge margin in our league. i ended up finishing 3rd. which surprised everyone. especially me.

but here's the deal. i think the real reason i did well is that i didn't get caught up in the trading. i managed to score a couple of good players and i got lots of offers to trade right off the bat. but i refused. and i think that that is truly what made the difference.

so, maybe the real magic of the monkeys is simply this: one and done :O)

The comparison of funded versus unfunded ventures seems to indicate that the investors actually picked reasonably well.

Of the funded ventures, 14% were acquired, while the same figure for unfunded ventures was 4%. Not perfect, but pretty good.

Chris - the thing I would like to know about those two data points is this: how many of both those ventures that were acquired (funded and unfunded) had the same CEO or founding team in place when they were acquired? I wonder if that would change the numbers -- maybe even get them closer to equal?

Noam Wasserman calls this the "Rich vs. King" dilemma that entrepreneurs face. They have to decide if they prefer wealth or rulership.

In general investors seem to prefer Rich, but many of the biggest companies lately (Google, Facebook, Zynga, Groupon) were founded by people who wanted to be Rulers.

That is so true it bears repeating: So many investors are not open to ideas. There's a lot of money out there, but it's still exceptionally hard to raise money.

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How many investors weigh 'product potential' over a 'product with sales'? Put another way - out of the 100 pitches, how many were 'cool products' and how many already had sales?

Henry, I don't know about their data, but I see a lot of pitches in Silicon Valley, and most do not have sales.

For better or worse, it's easier for investors to fund nothing.

Because once there exists something, it's subject to scrutiny.

That would be why I need a mentor..

Scrutiny coupled with feedback and action creates a better iteration of the product.

Eh, yes and no. A mentor can't do much. It's still 99.9% you.

A mentor can chart out a path, but only the entrepreneur can walk its length.

Actually, most mentors don't even chart. They just give a sanity check about whether you're way off.

I think we are on the same page. Maybe something just got lost in translation.

Feedback good or bad from a mentor or customer is healthy - only the entrepreneur can interpret and apply a response to the feedback.

I stated I needed a mentor because Adams response to my question gave me feedback that I can use. In fact, a lot of stuff on this site is awesome advice to stash.

With my first company - my success has been cultivated by my response to feedback from people in my industry 'who have done it' - they didn't set the path or walk the walk - I heard feedback about the market, sorries of mistakes and failures and many other bits of advise THEN - I chose my own path, mapped the path and set out on the trek down that path - I made sure to pack my cell phone and tablet just in case I needed a 'sanity check'.

Using the infographic from this original post proves to me that I don't live in the best ecosystem for finding the right mentor - so my quest to find a mentor starts...

I will say that this is one thing Silicon Valley has going for it: there are lots of would-be mentors here.

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