006 – Networking Tips, Founders Disease and Understanding What Angel Investors Are Looking For.

In this episode of the Wartime CEO Podcast, Randall Reade joined the show with me to dive into interesting perspectives what angel investors are looking for and a thorough discourse on “founder’s disease”. Randall’s intellect and countless experience navigating the business industry is unquestionable. He makes sure that he deals with an upstart CEO who truly knows what they are doing and dealing with. As a co-founder of DC ArchAngels, Randall brings together aspiring CEOs who wanted to scale their business and investors to devise a plan towards financial and product prosperity in the business world.

Randy’s Networking History 

[02:38] Now, I believed that I am an expert networker. But historically, I am terribly shy. I forced myself to attend events and meetings where I observe people how they deal with conversations. I copied what they do, it worked and I set sail.

How to Deal with People in an Event

[3:18] Supposed you are in an event and you don’t know anyone in that room. How will you deal with people during reception? Find someone who is a wallflower; alone and not knowing how to deal with people the same as you. Approach that person and strike a conversation starting with self-introduction.

[3:52] Since you started the conversation, that person would be relieved as someone has initiated hence saving themselves from embarrassment. From that point, you already got them.

[4:25] You can discuss with multitude of topics starting from what the lecture is all about or the venue; anything is possible. Arm yourself with a lot of things that you can discuss with, and there will be a time where a particular topic will hook themselves into opening up. Take it from there; perhaps sometime in the future, you will run into the same person but you made an incredible first impression.

[08:.37] There is no definite way to do this. You just need to force yourself out to do it. Instill in your minds that everybody else is in the same boat; awkward and uncomfortable. Do the initiative.

DC ArchAngel’s Backstory

[12:10] Following after the Great Recession in 2008. Me and my business partner decided to form the Washington DC ArchAngels where; it brings together the best investors around the region and finding excellent flow of deals through our network. We find companies around the country and globally.

An Investors’ Mindset

[16:02] Investors invest in the CEO or the Founder. They are not investing in the product. They invest in you and they can tell instantaneously if you are efficient CEO or not. It’s not about your passion because passion doesn’t do anything.

[18:58] If you want to start your business, think from an investor’s standpoint. Ask yourself how many investors out there? Remind yourself that each investor is different and they commonly have big personalities. They are not fools who do not know what they are dealing with. 

[20:49] If I put money in your company, how much will I make? That would always be in an investor’s mind; the only thing that would interest them. The only story they would love to listen to is not your story or awesome pitches but how their investments give them huge returns.

[30:00] You have to derisk your company as much as possible. An investor will not provide finances if all you have is an idea.

[34:26] Investors want low-risk, high-reward. Unfortunately, business will always be high-risk hence the necessity to derisk as much as possible. If you got all the bases loaded, you are good to go vs. someone who is a startup and all he has is an idea.

Founder’s Disease and its Implications to Valuations

[36:10] Any investors have experienced where an upstart talks a good game, but when you push them and they got to the point of exasperation, their expression would tell you to be quiet and give them the money.

[37:00] Upstarts who don’t take opinions from their investors, thinks that they know what they are doing, insist on doing it their way and chalk everything into their “passion” are few examples of a founder’s disease.

[40:35] Many upstart companies have been ruined by inappropriate company-valuation. If you tell an investor that your company is worth hundreds of millions without revenue and extensive research to back it up, you will lose them in a blink of an eye.

[43:20] As an upstart, you don’t need to know the valuation of company. It all comes when you get an investment from a serious investor where you can negotiate the value of your company. It should not be too high or too low since it would ruin your company either way.

[43:41] If you have an investor pushing for a low investment, low valuation and you opted for a high investment, it would not work. You need to have an agreement that works for both of you. The moment the investment comes in, you are now at the same side of the table. You plan the valuation that works for the company and future investors.

Conclusion

[52:21] It will always be a learning process. Every one has their perspectives and the more you talk to people, the more you learn. Encourage yourself to learn as much as possible because a lot of things will happen and you may apply some things that you have learned along the way.

Key Quotes:

[09:21 – 09:30] “You always learn even if you are an investor or an entrepreneur. Learning never ends.”

[24:09 – 24:13] “Know how to sell your product. If you are clueless, you are not a businessman.”

[38:01 – 38:06] “Investment is like being married but divorce is impossible.”

Learn more about DC ArchAngels on: http://www.dcarchangels.com/