| Within days of posting on one of the many websites | | | | they're interested in and those they're not. |
| created for entrepreneurs to post summaries | | | | Unfortunately for me, my particular venture falls into |
| designed to draw the attention of potential investors, | | | | the categories of both a startup and a highly |
| an email inquiry from the AngloAmerican Investment | | | | uncommon business sector for Angel investment. |
| Group and one Anthony Oppenheim. Mr. Oppenheim | | | | Add to that our need for $3 million in funding and the |
| explained in his email that from his Peachtree St. | | | | combination scares most Angels groups away, let |
| office in Atlanta, he represented a consortium of | | | | alone individual investors. Three million dollars starts to |
| private investors and mostly European family trusts | | | | encroach on the institution investment landscape |
| that were specifically looking for investments in | | | | controlled by venture capitalists and investment |
| globally oriented businesses like ours. They don't | | | | bankers. Five million dollars is the limit for most |
| charge any up front fees to review business plans. | | | | Regulation D offerings without getting into investor |
| They represent the decision makers and can write | | | | sophistication requirements. Get into that arena and |
| checks for the right investments, etc. Please call him | | | | be prepared to invest in the high five figures just to |
| to discuss the venture.Wow! Could we be that lucky? | | | | get started looking for more money, with no |
| Although the email came from a Comcast.net | | | | guarantee. Who are these entrepreneurs that have |
| address, it's not unheard of for even big investors to | | | | that in their back pocket? No one just getting |
| use common email addresses. It contained phone | | | | started, that's for sure.So what are the alternatives |
| numbers and address information that matched the | | | | when there are no rich Uncles or neighbors that just |
| Atlanta area and surely a huge conglomerate like the | | | | won the lottery and don't know where to put their |
| Anglo American Investment Group would clamp | | | | money? I can only speak from experience in that |
| down quickly on any scam artists brazen enough to | | | | finding one or two true believers that have a |
| openly use their brand. We were pretty excited.A | | | | network of accredited investor type clients or friends |
| phone call to Mr. Oppenheim gave good reason to | | | | is your best bet. Six degrees of separation no longer |
| believe they were for real. A professional demeanor, | | | | applies thanks to the internet. I'll guarantee you know |
| the right questions asked and quick answers to any | | | | someone who knows someone who knows a likely |
| concerns we had. They invest in people as much as | | | | investor. The trick is getting the word out without |
| projects. We'd be invited down to Atlanta to meet | | | | alerting every would-be competitor, idea stealing |
| him and his associate Al Dubin ("D-U-B-I-N, yes that's | | | | piracy gang or scam artist that will nickel and dime |
| the correct spelling" the conversation went as I took | | | | you to death. Truth be told, that's a high wire act of |
| notes) and review our business plan in detail. FedEx | | | | its own.There are literally hundreds of websites |
| 10 copies of the business plan before coming down. | | | | advertising Angel groups or supposedly acting as a |
| A non-disclosure agreement was not a problem. If | | | | clearing house for Angels to search for investments |
| they like what they see and hear we'll quickly see a | | | | they're interested in. You can quickly spend tens of |
| Term Sheet. He'd send details about the | | | | thousands of dollars in submission fees or retainers |
| accommodations in Atlanta."Awesome" my son | | | | for individuals or groups that will claim to have a |
| said.Then things took a strange turn. The next email | | | | professional team that will "evaluate" or screen your |
| read like a bad mass mail piece. They had reviewed | | | | business plan before they allow you access to |
| our business plan (funny...we hadn't sent them yet) | | | | investors even online. In reality many of these |
| and were prepared to invest the full amount. They | | | | websites are simply an introduction to someone that |
| boasted about investments made in places like Shang | | | | will drain your bank account as they offer to take |
| Hi (interesting spelling for Shanghai). A request from | | | | you to the next stage or introduce you to "real" |
| us for references or contact with legitimate past | | | | investors.Even some fairly well known Angel groups |
| investments as our real due diligence kicked in | | | | claim a qualified screening process that is really a |
| resulted in a email that asked us to supply more | | | | single individual that, unless your business plan |
| information than even the government knows about | | | | happens to be that person's flavor of the month, |
| us. And unfortunately Mr. Dubin's name had suddenly | | | | often even the best ideas don't make it through to |
| changed to Dublin.The jig was up.One look at would | | | | the real investors' eyes. So ask lots of questions |
| have saved us some time since these characters | | | | before you pay any fees and understand exactly |
| have been at it for a while and apparently the con is | | | | what you get for your money. Talk to entrepreneurs |
| to get entrepreneurs desperate for funding to | | | | they claim to have funded and find out how their |
| believe that Anglo American will gladly fund them if | | | | process really worked.There are several directories |
| the entrepreneur will pay the travel expenses of one | | | | of legitimate Angel groups and investment firms. One |
| of their representatives for site visits and setting up | | | | that I found fairly comprehensive is And there are |
| an offshore "escrow" account for safe keeping of | | | | software applications that are available to let you |
| the funds until the deal is done. Upwards of | | | | slice and dice who you look up by stage or sector or |
| $40,000.Entrepreneurs, like most creative people, are | | | | geography or any number of other demographics. |
| an odd lot (I can say that being what's called a | | | | Posting any venture information online is dicey if |
| "serial" entrepreneur) and matching them and their | | | | you're not familiar with securities laws. Have a good |
| projects with them right Angel investors is a often a | | | | securities attorney review anything you post to |
| long, incredibly frustrating and expense process. | | | | ensure you don't step over the line of selling |
| Hundreds of ideas die on the vine for lack of the life | | | | securities without a license. Don't be telling people |
| giving flow of cash. And anyone who thinks the | | | | they can expect an average of 90% annual return |
| process is easy, has had way too common an idea, | | | | on investment, even if it's true. Unless you like |
| asked for way too little investment and probably | | | | orange jumpsuits, of course. Even seemingly |
| given up way too much equity.The costs of raising | | | | innocuous language sometimes pushes the boundaries |
| capital to start any business from scratch are | | | | of information to advertisement.And then of course |
| mind-numbing. If you're doing a securities offering in | | | | we come back to the interesting inquiries you'll get |
| even the most basic form, a good attorney will be | | | | by posting information about your business online. |
| $200 per hour and up. And your accounting firm | | | | From the Malaysian doctor who invites you to fly to |
| better be top notch as well. Want a Private | | | | Kuala Lumpur (at your own expense) to seal the deal |
| Placement Memorandum? Better have a nice house | | | | without ever having so much as spoken to you on |
| that you're willing to mortgage to the hilt or sell that | | | | the phone. To Vernon Jones who has $6 million given |
| brand new Lexus in your driveway that you paid | | | | to him by a woman in Libya that happens to be |
| cash for last year. Wait a minute. You don't have | | | | stored right now in the Bank of Ghana, but calls from |
| either one of those? You spent every penny of | | | | a rented house with a phone number owned by |
| extra cash you had to developing your idea to the | | | | someone named Neomia Green. Or the gentleman |
| business plan stage?As my cronies from the Great | | | | from Thailand that was surprised to learn that I |
| Lakes states say "You're S.O.L." The days of | | | | actually called the company in Australia whose email |
| investing in just a concept are long gone.Today it's all | | | | address he was using illegally, and still claimed I |
| about proven business models in the form of an | | | | judged him too fast. It's always amazing to me that |
| already operating business generating some form of | | | | these con men assume that their marks don't know |
| revenue from somewhere. The friends and family | | | | how to use Google.Or that Anglo American bunch, |
| round of funding completed and likely one or two | | | | who by any other name, still reeks of a scam.The |
| major investors from your own network of wealthy | | | | sad part is that apparently the authorities don't have |
| folks is the sweet spot for attracting "early stage" | | | | the man power enough to snare these low level n'er |
| Angel investment. And some sectors are naturally | | | | do wells since we continue to get emails from these |
| sweeter than others. Being situated near the | | | | crooks despite calls and emails to various law |
| Research Triangle Park area of North Carolina, a | | | | enforcement agencies.The bottom line is that it really |
| virtual incubator for bio-tech, life science and high | | | | does take money to make money, even if it's not |
| tech business ventures, trying to sell local Angels on | | | | your own. The economy is headed in the right |
| an idea for the formation of a new insurance | | | | direction for entrepreneurs of all sorts, but |
| company, no matter how sexy the plan, rarely even | | | | understand the process and cost of raising outside |
| makes it into the evaluation process. The Angels of | | | | capital before you get into it. Find yourself a mentor |
| Silicon Valley look mostly for ideas in a different | | | | than has been through the entire process. Ask a lot |
| sector that needs no description.In fact, most Angel | | | | of questions and learn from their mistakes.After all, |
| groups will readily identify those business ideas that | | | | the wheel has already been invented. |