When most startup founders think of Silicon Valley, they automatically think of the Sand Hill Road millions. The dream, for most startups, is to leave the Valley with a large check from one or more impressive venture capital firms.
In reality, the road to Sand Hill is long, hard and expensive. Regardless of what you’ve seen in movies or read in magazines or books, seed investments, and the road to successful fundraising, starts with generous angels.
When Eyes On Freight began our startup journey in Columbia last year, we didn’t know where to even start looking for investment money. Finding and getting introductions to angel investors in Columbia is more difficult than you would expect, even when compared to larger cities, like Kansas City or St. Louis. We joined the Missouri Innovation Center in hopes of laying the groundwork for potential investments.
Compared to most cities our size, Columbia has a rather large angel network, and even has its very own angel investment group, based out of MIC, that can provide startups a great support network. We thought we had the perfect formula for startup magic.
We soon learned the difficulty of accessing angels in Columbia. It seemed to be a two-part problem — the first reason is that Columbia is too institutionalized. In order to get in front of any angels, you either have to know them personally or know someone to introduce you to them. Getting in front of the group takes many stages of vetting. At the end of the day, you might not be invited to present to them if your company does not have the right growth and revenue numbers (let’s be honest: most startups seeking seed-stage funding do not have either of those yet), or if some in the group are not interested in investments in your market.
The other reason is that Columbia has many generous angels who constantly get pitched ideas in hopes of securing seed funding. I believe this to be the larger of the two problems. Startup founders automatically believe that their idea is going to be the next big thing. We have to believe so — why else would we be crazy enough to pursue our ideas? Founders need to be more respectful and appreciative, and they need to understand that there are boundaries. By incessantly pitching to angels and asking for investments, we are, in many ways, destroying our very own ecosystem.
The biggest lesson I have learned during my time in San Francisco is that seeking investment is similar to dating. It’s a numbers game. You speak to hundreds of venture capitalist firms and try to obtain their interest from among the masses. Some firms will say that we’re in a tech bubble; others will tell you that, in days past, what used to be a B-round investment is now a seed-round. The bottom line is that if you are not raising at least $2-3 million, the average VC firm will simply tell you that you are too small for them. Regardless of how good of a product or idea you have, and even if you have the numbers to back it up, you will more than likely be reaching out to the generous angels before any large VC firms show serious interest in your startup.
So, fellow startup founders, next time you see an angel, stop and think. Instead of pitching your idea or asking for an investment, start with a thank you and build a relationship. It’s because of angel investors that startups start. The only way we will build a strong startup community is by building trust and relationships with our angels. Remember that they are not only giving you their hard-earned money to build your dream, they will be the ones that carry you on your path to Sand Hill Road.