21 January 2008 by Grizz.

Myth #1: investors just want to take advantage of you.
Myth #2: investors want to steal your idea.
Myth #3: investors know more about your business than you do.
Myth #4: investors are money hungry bastards.
Myth #5: investors are all lazy, rich, and arrogant.
Myth #6: investors follow a “playbook.”
Myth #7: investors don’t work and play well with other investors.
Myth #8: investors just follow the latest fads and investment trends.
Myth #9: investors have to move fast and will work on your time scale.
Myth #10: investors need you more than you need them.

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11 January 2008 by Grizz.

One of the most intimidating things to do is distill that 100 page business plan you spent three months writing down into just a few sentences. Some folks calls these “elevator pitches,” but I try to avoid talking to people in elevators, so refer to this as The Ask.

It’s a difficult task, but really important. Here’s why:

1. it demonstrates you know your business so well you can describe it in just a few sentences;

2. you (hopefully) will answer the Three Questions (What is it? Who cares? How do you get it?) in a concise manner;

3. The Ask educates prospects and advocates alike, so they can help you find capital and customers.

Think of the paragraphs below as a “Mad Lib,” like the ones so popular 20 years ago (hold on, I’ve just been told by Penguin Putnam Inc. that they still do a brisk business in Mad Libs thanyouverymuch).

The idea is to replace my silliness (in parentheses) with action words. Once you have that done, go ahead and rewrite the entire statement to better fit your specific needs.

THEN, send it around to people you know and ask them if they can understand what you’re so darn excited about just by reading those lines.

Here we go.

(cool company name) has a (patented/unique) processes for the manufacture of advanced (thingamabobs). These (thingamabobs) are sold by (quantity) and allow (this, that, and the other) to work (better/faster/cheaper/at all).

Companies like (A, B, and C) purchase (thousands/tens of thousands) of (thingamabobs) for (some amount of money each), but need (better/smaller/faster) ones like only we can provide. Ours are better because we use (some unique process) which allows, for the first time, for the creation of very (small/stable/unique thingamabobs) for new applications such as (this or that) and existing applications such as (the other).

The total (thingamabob) market was (a bunch of dollars) in (some recent year) in the U.S. & even (more bunches of dollars) worldwide that same year.

We’re seeking (some reasonable amount of money) to do (something) over the next (short amounts of months), and will require an additional (bag of money) in the (longer period of time) in order to capture (some large) percentage of the market and reach revenues in excess of (some large amount) by (some year in the future).

See, it’s simple!

Now you try your own. I’ll even help.

Send your Ask to blog@purplemountainventures.com with the subject line of “The Ask: Help!” and I’ll send you my comments/ideas/snide remarks.

Grizz

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9 January 2008 by Grizz.

We regularly get calls from folks wanting to invest in one of our companies. These inquiries are usually broken down into:

1. folks wondering if Company X is public;
2. folks wanting to get in on an IPO (make millions with nothing more than a well-timed phone call);
3. legitimate individual, corporate, or fund investors
4. shisters that claim to have as much money as we need.

Number 1, above, is easy to deal with.

Number 2 is benign.

Number 3 is where you’ll find legitimate equity or debt capital.

You’ll need to be very careful around the forth kind of enquiry.

I recall one of our early firms was asked by a shister to pay him a retainer to find capital, another asked to be given founder’s stock before he would go out and help us raise capital. Still others come on strong, act credible, but never deliver.

The pathetic shister investors are easy to spot. These idiots make very public postings on blogs and web sites saying they are raising a new fund, and promising outrageous returns; or they rattle off a list of well-known names; or worse, they “can’t disclose” their very private sources of funding.

Still others just want to see if they can insinuate themselves into an organization in the hopes they’ll be standing next to someone when something interesting happens.

If someone or some deal sounds too good to be true, it usually is.

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