@Dr. Smith…

Glad to know that an example that came to my mind is one given by stalwart like you …

you are right about the baby example as well…..

and I must thank you for the statistics on marriage and investment…. I thought the equation was heavily tilted to the investment side

@ walter ..

thanks for the insight .. you are right … these days even guys are going around dating 15 women at a time and if resources and law allowed they would marry 15 girls at a time …

you are right that the VC’s have to work with 100 proposals at a time but I would still say they should short-list and have a dating period… i think its good for both sides…

for VC firm of google one marriage was good enough…..

Praveen, I agree with your example quickly.

This is why I never accept the traditional VC model that gives you 15 minutes on the phone to pitch your investment. This analogy is not the best way to find a wife, nor is it the best way to find an investor. In my view the traditional courtship process is preferred where time and quality are take precedence.

However, I understand the VC is going to enter multiple relationships, and speed is the key. When you see 100 proposals a month to marry, you want to get through them as quick as possible since you know 90% of those marriages will fail, and the top 10% is what you know will make you money in the end.

Your example will not go over well with many who have a different view of how they “choose their mate” but I think yours is correct in my observation over the past 20 years. The only difference now is that they want 3-4 of their friends to join in the relationship so they don’t take all the risk when the marriage falls apart in the end…and the 15 minutes has been reduced to 10.

@ Walter

Of what I have read so far in the discussion I would subscribe to your point of view completely… the way i see it is … Investor and enterpreneur relationship is like a girl meeting a boy and falling in love at first sight, dating and getting married.

When an investor is looking around with both hands full of money he has an some set guidelines and criterion accordingly to which he would want to invest. However, in the subconscious he is fond of certain aspects of enterpreneurship (promoters attitude, product or service portfolio etc.) that he has not included in his guidelines or criterion. A first generation enterpreneur is someone who believes in his idea or product and risks not only his little money but more importantly his career and family’s well being. He absolutely loves it when someone listens to his arguments on why the business is going to be successful and endorses it.

So when a investor finds an enterpreneur who does’nt fit in his guideline but appeals to his subconscious he expresses his excitement which in turn excites the enterpreneur. It’s like love at first site .. sparks fly.. heart races and gets filled with emotions.

Then after initial exchange of emotions and liking each other they start dating and finding out more each other in detail. After a while you know if your first impression was right or wrong and whether the things are as rosy in details as they appeared on the first sight. If thats not the case you part your ways. However if it clicks you go ahead and make your pitch and pop the ring.

The whole city comes to your wedding, eats and drinks and goes back to home. You spend some quality time on honeymoon(where you fund based on emotions). However, the dating thing was just an assessment the reality starts off now. You politely tell each other about things you don’t like and see if they can be moderated or changed completely. Again some marriages hold and others don’t. Some hold for few months the others for some years and some last for decades or lifetime.

So the risk is always there and your have to assess it in percentage and see if it is still less that the appeal of the business plan or the operational plan later. You have to have deep understanding of each others perspective and respect for each other’s view and you make small corrections/adjustments here and there when you see your marriage is more important that these small things. However, one sided understanding and adjustments also don’t last long. It has to be both ways.

Actions count more than words

The advice you give Dr Smith is spot on. And, I have found that entrepreneurs would do well to apply it to their own businesses too.

The greatest danger for any business is to hire or contract with people who talk a good game but fail to deliver.

The problem with the traditional employment structure is that it works on the basis of pay me first and then I’ll show you what I can do.

Whereas the business wants greater certainty that the person can deliver, the person just wants a regular pay check. Just like the investor and many junior entrepreneurs.

In my view, those entrepreneurs who are saying ‘give me the money and then I’ll make it happen’ are stuck in the traditional employment way of thinking. The chances are that the last thing they did was a job.

Interestingly, the approach of the investor is exactly the same approach that the entrepreneur should take to his or her business implementation. The two are not different.

The insight here is that if this is a surprise to you, then you are not really an entrepreneur. And, if you wish to do something about it, start hiring freelancers or contractors for short and specific projects – that require lots of implementation and a small amount of words. You’ll quickly find out who can deliver and who can not.

So, perhaps investors should take the same approach to entrepreneurs? Give them small projects and see if they can deliver?

Best regards
Neil

What is the quickest way to find more about venture capitalists who cater to a certain type of industry?

Do investment houses use services of experts who can help them analyze operations before making an investment?

Your comments on the case study are illuminating. I am learning a lot. I found it odd that the angel (who is also part of a larger group) was hankering for the technology but he insisted on his way for the management to the extent where he burnt bridges. Also, how do you motivate a founder, who is also the chief scientist, if he is going to be reduced to a scientist’s position. Some people are very rational and will say, “Oh well, as long as I am going to get a rate of return, what the heck”. This guy said, “What makes the angel think he can do better?”. Thereby hangs a tail, no one won. The project is still in limbo…