Today, we have a special feature in honor of the holiday here in America, Independence Day. This is a holiday that really highlights the entrepreneurial spirit, showing how as a nation we came together to take a risk and won everything in return.
One of the questions we get asked all the time at ROCeteer is how can we find funding for these ventures? Who are the people that will back our dreams?
You turn to the Angels, of course!
Please introduce yourself to our readers…
What types of businesses do you feel make for the best investments? Why?
I like to find businesses that have:
1) A great team that can prove previous success, and has been able to take in investor money and return it with profits before,
2) A clearly articulated value proposition that can one day be the cornerstone of a billion dollar (valuation) business, and having a clear barrier to entry in the form of IP, licenses, or market position,
3) A clear understanding of the market they are entering,
4) Realistic and detailed understand of the competition with a real attention to detail,
5) Clear understanding of; use of proceeds, valuations of comparable businesses in their industry and analogous industries, and lastly clarity about the path to return of investor capital and profits. Businesses that can meet these criteria solidly always have the very best chance of winning.
At what stage is it appropriate for a startup to seek investment from you?
Normally I like to see businesses that have already raised capital from friends and family and a couple of angels, are already up and running, and past the proof of concept stage. The cannabis industry is different, this is not the creation of a new industry, it is the migration of a MASSIVE existing industry from black market to regulated, and the corresponding risks and timing are significantly different. As a result, looking earlier makes sense because it is moving SO fast.
What do you look for in your investments?
Besides what is covered by my second question we like to see technologies that are rapidly scalable, IP that is reflective of a massive market opportunity, and brands that show the sophistication and clarity necessary to survive the coming froth.
What are some things entrepreneurs do wrong when asking angel investors for money?
The single biggest mistake entrepreneurs make when asking for money is asking for money. What I mean is that the entrepreneur should show where they are, and try to find out why they are not attracting capital. A friend once said “No good oil and gas deal makes it five miles from where it was found” and what he meant was that a well structured and clearly articulated opportunity will ATTRACT capital. Thinking that if you just had the money, everything would be better, is the most common mistake I see among entrepreneurs.
Have you ever had a product that looked good on paper but was terrible at pitching? What happened?
I was the CEO and co-founder of a company that should have been a billion dollar product. It made all the sense in the world, was obvious in it’s value proposition, and was attacking a completely open market with no one that even came close to competing. We were too early, and did not have the correct underpinnings to our team. We were lacking in a few areas and we did not see it. The investors did, and we were not able to raise enough to grow the business. I learned a lot. You know what “they” say? When you do not get what you want, you get experience. I got a lot of experience from that.
What is the one thing you hope entrepreneurs say during a pitch meeting?
What an entrepreneur says with his words explicitly is less important than what can be inferred. The most important takeaway for me, is will they be easy to work with and are they coachable? If the answer is yes to both, we are on, if no to both, I am gone, and if yes to one and not the other, we need another meeting.
Can you describe your due diligence and investment process? What’s important for a startup to know about it?
Our due diligence process is substantial, and if an entrepreneur comes prepared with well-organized, succinctly summarized, and well referenced due diligence materials covering the basics on her team, her value proposition, the market, the competition, and the financials with all assumptions parsed out and supported that move things along at a much brisker pace.
Once you partner with an entrepreneur, what do you expect of them?
I expect the operators of the business to be collegial, professional, rational, and dedicated.
In addition to the money, what do you offer to teams that you invest in?
We bring so much more than money. Anyone can write a check, we are partners who bring a network that has been decades in development, a team of professionals that cross multiple disciplines, and we are lucky to bring a reputation that is singularly the best in our industry.
What is your favorite startup/business right now? Why?
If I had to pick one startup, it would be the one producing the Mystabis Inhaler. It is the only measured dose inhaler that exists for Cannabis now. The idea of being able to produce a consistency of dose as an inhalant is so critical, and up until Mystabis was available, non-existent.
Thank you so much for that, Leslie! You can reach Leslie here.