Whenever I meet a new startup, I treat it like a rock band. Not only because I believe startups are rock stars, but because I have learned—from my experience as the owner of an indie record label and as an early-stage investor—that there are a lot of similarities between the two.
So, how does one get an investment for an idea that seems obvious? Very simple: Understand what angel investors and VCs are looking for and give it to them. Investors have pattern recognition, and they are driven by four Fs: fortune, fame, fear and fun.
- Jason Calacanis, Founder of Mahalo.com
There are no real “rules” to angel investing. You don’t have to spend a lot of time. You don’t have to mentor. You don’t have to do anything you don’t want to do. You can just write checks. Entrepreneurs LOVE fast decisions from people they respect who let them build great businesses.
For something like seventeen years, I have been investing in entrepreneurs who have had the freedom to innovate on the Internet. It has been a powerful life lesson for me. These people imagine something, they create it, and they are off and running building a business, hiring employees, generating cash flow. They ask nobody for permission. They don’t need any permits. They don’t need any real estate. All they need is a server (now rented in the cloud from Amazon and others) and a laptop or two and they are good to go.
It goes without saying, but sometimes you may be tempted to lend advice despite your lack of excitement about the product. Big mistake. When you’re an adviser, you’re an investor (with your time and resources), and you should never invest in something you don’t believe in. You get into trouble when you agree to serve as an adviser despite your reservations.