The process of funding early stage companies developing products and services for sale to market is a marvel of inefficiency. If you convened a world-renowned council of experts, it would be difficult for them to come up with a less efficient system. The system is fraught with disorganization, redundancy, and conflicting ideals and goals.
I have raised $12.5M for three companies where I was a founder. I have assisted six other teams in starting and funding ventures. I have now lead investments in 24 ventures by Angel Capital Group. I have put in my requisite 10,000 hours, as has every member of the ACG team. I have learned many things, but one is most important. Inefficiency of this system puts both sides of the deal at risk: the entrepreneur at risk of business failure and the investor at financial risk.
When I would raise capital for my startups, I vividly remember saying to my COO/CFO at the time, that I would be back in six months, to complete a task list in order of priority, and not to burn the house down. Then, I would immerse myself in the process of raising capital….not leading a company, not developing a product or service, and not selling the company’s wares to clients. Funding typically comes in fits-and-spurts that rarely line up with cash-need leading to a stop-start product development process that only serves to increase cost and development time. And, every time I came up short, we had to decide which of our critical initiatives had to be cut to fit our plan to the actual budget. I called this “Chinese Funding Torture” (no offense to our Asian brethren intended!) The problem is the first initiatives that get cut are the risk mitigation tactics! The entrepreneur simply can’t afford to focus on risk mitigation because only the core strategy is funded…..and often underfunded at that. This scenario is much more prevalent that you would imagine. There are many, many more reasons to say “no” to an investment than “yes.” You don’t hear about this part of the funding process because no entrepreneur wants an investor to know this happens for fear that they will further delay or withhold investing and exacerbate the problem.
It does not have to be this way! By increasing standardization, information flow, and efficiency, we can reduce risk for entrepreneurs and investors.
ACG is a syndicate of angel groups and funds. We celebrate innovation, reward strategic risk-taking, and focus on performance. We embrace the concepts of economically sustainable communities, regional economic impact, and wealth creation. ACG is designed to unite extraordinary investors with outstanding entrepreneurs in an information-rich framework for making intelligent investments. An entrepreneur can access fast, efficient, scalable capital, and investors can access great opportunities that are thoroughly vetted and mentored by successful peers around the nation and in a wide variety of industries. It is elegant in its simplicity, but very powerful!
Why do we get out of bed in the morning? That is easy. We are called to this mission. We believe in breathing life into outstanding teams with innovative ideas to create “great” companies (in the Collins’ Good to Great sense of the word). We believe in building the communities that our investors deserve by cultivating local and regional investment opportunities. And, we believe in creating extraordinary investors by building a framework for smart investing.
We have the greatest job in the world. We get to work directly with successful business people and exciting high-tech startup companies. We unite them to create incredible companies that will someday be household names and create wealth for both entrepreneurs and investors. Sure, the hours are long, it is expensive, and financially risky. But, at the end of the day, we know we are making a difference in the world. It is about creating great companies and great communities. Want to join us?
Copyright Eric L. Dobson, 2016