Comments on: Conversations with Investors – Chapter One

By: Conversations with Investors – Chapter Three | The Federal Circle

Conversations with Investors – Chapter Three | The Federal Circle — Fri, 25 Jun 2010 14:36:13 +0000

[...] first article in the series – Conversations with Investors – Chapter One – focused on Jim Hunt of The MITA Group. Jim is a fairly typical angel investor – a successful [...]

By: Martha Retallick

Martha Retallick — Tue, 15 Jun 2010 23:39:42 +0000

Count me as another one who found this article via LinkedIn. Very timely information, as I’m about to become involved with a company that may be seeking angel and/or VC funding. Thank you for posting.

By: Dr. Earl R. Smith II

Dr. Earl R. Smith II — Tue, 15 Jun 2010 01:40:46 +0000

Don, I have not been able to discover any sense of entitlement in Jim. I’m pretty certain that the same traits that made him a successful entrepreneur are guiding him as an angel investor. There is one thing that is very hard to argue with. Jim has made hundreds of millions of dollars for himself and his partners. Investors who bet on his ability have been very well compensated for taking the risk. It is a variation of the old Nike commercial – when you can do it, it is not bragging. Dr. Smith

By: Dr. Earl R. Smith II

Dr. Earl R. Smith II — Tue, 15 Jun 2010 01:36:21 +0000

Paula, My experience with professional poker players is that they are very risk-averse. They spend most of their time trying to reduce risk and gain advantage when their opponent over estimates the situational risk. Anybody who would write such a book as you describe knows next to nothing about them. When I was at the Sloan School, MIT we studied entrepreneurs and found that the most successful ones were also risk-averse. The amateurs thought that being an entrepreneur meant taking risks – but they failed our tests quite quickly. The successful entrepreneurs were incredibly accurate calculators of risk and very good at mitigating it. They won by knowing when the odds were in their favor rather then hoping that the dice would prove them the anointed. Dr. Smith

By: Dr. Earl R. Smith II

Dr. Earl R. Smith II — Tue, 15 Jun 2010 01:29:50 +0000

Interesting article. As I read I tried to relate the article to investors who invest in film as this is what I am interested in. A book I am currently reading on how to find investors interested in investing in film encourages the reader to (only slightly tongue-in-cheek) find a poker player because they are accustomed to risk. It would seem that those individuals who are interested in investing in films and those investors interested in investing in technology are at opposite ends ot the investor spectrum.
Posted by Paula Smith

By: Drew Doyle

Drew Doyle — Mon, 14 Jun 2010 14:49:26 +0000

Dr. Smith,

I echo the comments above. While it initially seemed a tad bit generic, the description of the filters and the weighting of each was very helpful.

I also concur with the comments of David Nelson that there are a number of intermediaries who are a waste of time. I appreciate your insight and the time that you spent putting this together and sharing this with all.

Thanks,
Drew

By: Dr. Earl R. Smith II

Dr. Earl R. Smith II — Mon, 14 Jun 2010 13:53:09 +0000

I have read the article with great interest. Thank you.
Posted by Menino Lima

By: Dr. Earl R. Smith II

Dr. Earl R. Smith II — Mon, 14 Jun 2010 13:44:10 +0000

David, Thanks for your comment. I am happy that you find the article useful. The next chapter will come out later this week. The world you are looking to get into is very difficult to penetrate. The first requirement is that you have money to invest – the more you have, the easier it is to get into the space. Most angel investment groups are fairly clannish – they tend to associate with people who have a common experience. In the Northern Virginia area, for instance, most are successful entrepreneurs who have sold out their company and acquired substantial wealth in the process. There are lots of ‘advisers’ around but mostly they are relegated to bit parts. The key to the angel investment business is personal wealth.

Venture funds are a different matter. Institutional investors place funds with fund managers who make investment decisions. In the current economic environment it is virtually impossible for a team to raise a first-time fund. Investors are focused – tot he extent they are funding at all – towards teams that have made money for them in the past.

Best of luck in your efforts. Dr. Smith

By: David R Nelson

David R Nelson — Mon, 14 Jun 2010 13:32:10 +0000

Terrific insight.

I am fairly new into the PE/VC world as I am a displaced Mortgage Banker. As in all sales, success depends on matching “buyers and sellers” properly. I have exhausted many hours going down the wrong path presenting opportunities to many who turned out to be finders or brokers just like I am. Mentors in this arena have been hard to find; I appreciate reading articles such as this one and look forward to other similar posts.

By: Dr. Earl R. Smith II

Dr. Earl R. Smith II — Mon, 14 Jun 2010 13:17:38 +0000

Jim, thanks for your comment. You have put your finger on the first disconnect – the failure of the presenters to pre-match their business opportunity to investors. All of the investors that I have interviewed for the series say the same thing – they discard out of hand more than 70% of what comes over the transom. Most founders do not stop to think about what generally happens next. These investors – particularly angel investors – talk to each other and the word gets around that ABC team is just throwing mud up against the wall hoping some of it will stick. The negative branding makes each subsequent presentation less likely to result in funding. Dr. Smith