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The Founders' Top 10 List | Business

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The Founders' Top 10 List
The Founders'  Top 10 List

If you’re searching for angel or venture funds in the Metro DC area, and you missed the Potomac Techwire breakfast roundtable on Tuesday, then you’ll want to take note of what the funders’ panel had to say. Many of the themes investors found most important paralleled the entrepreneurs’ advice.

The funders’ panel recommended that entrepreneurs:

  1. Know who you are.
  2. Know your competition.
  3. Validate your business concept. Talk to a lot of people early.
  4. Prototype. It helps tell your story in a big way.
  5. Show investors that you can execute and reach milestones.
  6. Understand your limitations. The founder is rarely the CEO five years later.
  7. Be realistic. Don’t get hung up on valuation and walk away from a good deal.
  8. Bootstrap and be as resourceful as possible. It brings independence and the valuation you want.
  9. Have a business plan. Don’t spend a lot of money making it pretty. Oh, and don’t tell investors your forecasts are conservative.
  10. Do as much due diligence on the investors as they do on you.

And just like yesterday’s blog, one more tip: Don’t approach funding like it’s a conveyor belt. Your company and the business climate aren’t that predictable. Expect to engage in a long, intense process. Each investor has a sweet spot, and it’s all about finding the right fit for both of you.

The sweet spot isn’t just about the sector, the stage you’re at, or the amount of funding you need. It’s also about chemistry. The people who invest in your company will influence how you move forward in a big way. Discord detracts from your ability to focus, execute, and ultimately limits your potential. A synergistic fit between entrepreneur and investor mitigates weaknesses and amplifies strengths. The right investor becomes a trusted, valued member of your team.

I learned a couple of important things about angels during the roundtable. First, most invest in companies within a 1-2 hour drive. It’s a red flag when companies seek angel funding beyond that radius. Unless of course, you use AngelList, which changes the game for both investors and early stage companies. Offered as a free service, AngelList creates an efficient, online marketplace with 1,500 participating angels looking for interesting deals. They’ll ping you if they like your story. AngelList can compress the early stage funding process into a matter of days or weeks.

Thanks again to the sponsors and panelists for Seed Stage Capital Outlook 2011. You offered sound advice. What we’ve discovered during our search for capital is that you’re often generous with your time and offer excellent advice offline as well. While it’s up to the entrepreneur to decide what’s best for the company, your expertise and generosity at this stage make a big difference to startups.

Marcia Moran