One of the ways I judge a book as really good is when it still has me thinking about its content a few weeks later. I recently read Angels, Dragons and Vultures by Simon Acland and quickly wrote one post on the subject of having a plan B, and I have been continuing to think about a lot of the ideas in it. I almost universally agree with the ideas, but I think that there are lots of practical details of the experience that differ from location to location.
I started trying to capture some of my thoughts in a blog post, but it got crazy long so I’ve split is into a mini-series, and this is the first one. I have the following list of working titles for the instalments – this may change as I fill in the details:
- Start Now (also thanks to a conversation I had with Scott Torrence’s on his Start It Lean blog)
- You Don’t Need a Plan
- The Right Investors
- Look Beyond the First Round
- Don’t Do It
- Connecting to Investors
- After the Honeymoon
- The Great Escape
As always I am sure plenty of people with other experiences will read this and have different ideas – please share them and help to get a debate going!
Investment (Part 1) – Start Now
Businesses that are likely to need investment need to be working with investors many months, or even a year or more, in advance of when they need investment cash.
Identifying appropriate investors, getting high quality introductions, forming a relationship and ultimately putting together a deal are time consuming activities. I’ve heard a number of people saying that getting investment takes at least 6-9 months from a first meeting, depending on the deal size and the investor, but I find the work starts long before the first meeting, and there tend to be a lot of first meetings that lead nowhere before finding a suitable investment partner.
I know of a number of investment deals where the team and the investors have been working together for several years before the investment was made – at a recent Informatics Ventures event John Waddell of Archangels (Scotlands biggest angel group) cited an example where the investors had actually written the business plan for the company as part of an extended collaboration pre-investment.
I am sure there are exceptions where deals have been done very quickly in Scotland, but I don’t plan for the exception.
If I think a business will need investment at some point in the future, my approach is to start the process immediately. I place this task on an equal priority with completing the product, acquiring customers and all the myriad other tasks faced by the founding team. Of course, it should not be nearly as time consuming, but starting early is the key to building good relationships, and good relationships are the key to a good investment experience – for both parties.