Dr. Earl R. Smith II

Cash, and lots of it. Starting a business revolves around this principle, so do your investors. They want to know how much cash you’re going to make, how soon you’ll make that cash, and how much cash they can pocket.

There’s lots of motion in the ocean in the early-stage investing world. TechCrunch has a write-up on the companies that presented at Y Combinator’s demo day yesterday. I had several of my own thoughts.

The Federal government’s goal is to award 23 percent of all Federal contracts to small businesses. That’s hundreds of billions of dollars.

Angel Investors come in various guises all across the world. They are as varied as there are different personalities. But underneath all that diversity lays a core that they all share. Knowing what makes them all tick, will give you a much greater advantage, as you can format your net to reach as broad a population as you can while still engaging them hard. There aren’t that many, but you will soon realize that they do go very deep.

There is a telltale sign of an inexperienced startup entrepreneur. They get premature merge elation. You know, they get so excited about doing deals all the time instead of doing the hard work of figuring out their businesses. I understand this. I was a premature merge elater once.

It had been some time since our last meeting. An e-mail showed up indicating that she was ready to sit down and talk. When we began the engagement neither of us was sure where things were going or where they might end up. Our last meeting – some weeks back – had started with some tension in the air. My coaching client had made a successful career as an entrepreneur. She sold her companies and made a lot of money. After a brief ‘vacation’ from business, she began to cast around for her ‘next life’. After some reflection she had decided to become an angel investor.

Novak Biddle Venture Partners was established in 1997 to provide equity financing and assistance to the management of young, information technology companies. NBVP provides equity financing and assistance to the management of early-stage, information technology companies principally located in the Mid-Atlantic region.

Every investor is different – they have different backgrounds and approaches to the process. This is one of the greatest lessons that founders need to learn. Each investor has a common characteristic – they have money to invest.

In this series of articles, I will describe several discussions that I had with investors in the Washington DC area. They range from angel investors to senior partners in well established funds. I have known most of them for many years.

One of the most frustrating things about getting a business off the ground, up and running, is the money chase. There seems to be no end to the meetings without tangible results or the polite ‘don’t call us, we’ll call you’ responses to a polished and passionate presentation.