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Joe Platnick: Do They Have a Great Rolodex, Advice and Connections?

A few years ago I wrote a post about evaluating Angel groups and the criteria to use when seeking investment. The list included:

  1. Do they charge fees
  2. Do they actually have capital and a track record of investing their own personal funds
  3. How transparent is their organization and investment process
  4. How do they say ‘no’
  5. Honesty and integrity
  6. Rolodex and connections
  7. Advice
  8. Are they respectful of entrepreneurs
  9. Do they help entrepreneurs, regardless of whether or not they invest
  10. Do they support the local entrepreneurial community

Although charging fees—or pay to play—is a good litmus test for weeding out disreputable angel groups, you’ll also find that for-profit angel groups typically have a poor track record with these other criteria.

Most angel groups have money, and one group’s money isn’t any greener than another’s. Beyond cash, the other ways an angel group adds value to a startup is through great advice and personal connections.

One of the easiest ways to assess an angel investor’s ability to provide advice and connections is to read their bios on their website. High-caliber Angels with a lot of experience at both large and small companies, tend to have strong Rolodexes and skills that can be applied to helping portfolio companies. When reviewing their experience, consider both their work history and the companies they’ve backed as investors.

You can also judge the caliber of the group through your initial experiences, as many Angels provide worthwhile advice and introductions to their networks in the early stages and prior to investing. If you’re further along with an angel group, consider doing more diligence on the group and its members by contacting CEOs of their portfolio companies.

When it comes to connections, one of the most important when evaluating an angel group is links to VCs. Although many of our portfolio companies have told us the Angel round is the last tranche of money they’ll need (and they even say it with a straight face), most startups will invariably require follow-on funds.

William Quigley, a prominent local VC from Clearstone Venture Partners wrote a post years ago, Value of Certain Angel Investors:

As a VC, I divide angel investors into two buckets. The first group includes angel investors who know the space they are investing in. Perhaps they previously started a company in the same industry or were part of a successful company targeting the same market. As it happens, angel investors in this category usually know the VCs who invest in their space and can be a great help in introducing a start up to smart venture capital investors. Better still, these angels typically know the going terms for a start up in their market. Accordingly, they can help the entrepreneur get the best deal warranted given the progress of the business.

The second bucket of angel investors are those who have some spare cash to invest but don’t have any familiarity with the target market. These investors are generally not known by VCs active in the specific market the start up is pursuing. In most cases, they can’t help with follow on fund raising. Because they don’t know what the going VC terms are, they often set terms for their investment that make it harder to raise money in the next round.

VCs can’t know everything about an industry. So how do they get comfortable with a new business? They rely on smart people who are accomplished and well connected in that industry. If someone of that caliber happens to already be an angel in your business, raising venture capital just got a lot easier.

In the current environment, CEOs and entrepreneurs don’t always have a choice when it comes to selecting their investors. However, when you do, it’s important to pick an angel group that can deliver the intangibles, such as advice and network, along with the cash.

Innovation at SBEC: Meet Click & Carry

SBEC cohort company Click & Carry is on a roll. If you haven’t seen one yet, Click & Carry provides shoppers a simple, handle device to comfortably carry multiple bags at once. Imagine yourself picking up and carrying all those plastic grocery bags upstairs with ease.

Click & Carry, which can be used in your hand or worn over your shoulder to carry up to 50 pounds, features a conforming gel grip with a rotating top to easily load & unload cargo. The company’s target markets include mothers, urban dwellers, seniors with dexterity issues and construction workers. Click & Carry was awarded two utility patents.

We recently caught up with Click & Carry Founder & CEO Kimberly Meckwood to ask her a few questions about innovation.

What was your original inspiration for innovating your first Click & Carry product?

A simple change in daily routine can have an enormous effect on everything else in life. Even something as small as how we bring our shopping bags from the car into the house can set us on a path no one could have predicted. Ten years ago, I was living in an upstairs apartment in Brentwood, California. Bringing groceries to my apartment required carrying groceries up several long flights of stairs and through multiple doors just to get to the front door. After finishing shopping, I would call my boyfriend from the car to come downstairs to help me bring up the groceries. Then life happened; we parted ways, and I found myself struggling to carry the shopping bags herself.

I knew I needed to come up with something that made shopping easier. Like the beginnings of so many inventions, I identified a common problem that many people dealt with and the stirrings of a solution began to take hold in my subconscious.

What do you consider the most innovative product you’ve created?

Click & Carry is a simple, handle device that allows shoppers to manage and carry multiple bags at once ~ comfortably. It may be carried in your hand or worn over your shoulder. When worn over the shoulder, the device uses the weight of the bags to counterbalance for a “hands-free” carry.

Some products are radical innovations, and some are incremental. What are some incremental changes you’ve done that you think were important to your business?

There are three incremental changes that I made to Click & Carry. The first change was adding a over-hanging lip to the locking mechanism at either end of the Click & Carry. The benefit is that when heavy weight is placed on the bottom portion, the over-hanging lip keeps the top and bottom portions joined together, as opposed to separating due to the heavy weight. Then, I added dividers on either end of the handle to help the end user evenly distribute the weight. Finally, I added an “extra-comfy” gel padding for a more pleasant customer experience.

Sometimes innovation is invisible because it’s on the manufacturing side – what’s an innovative thing you’ve done that we’ll never know about?

I recently created a new mold that creates a small, thumb-sized indention on each side that reduces the amount of plastic used to make each Click & Carry. The modification doesn’t weaken the product, but it does reduce manufacturing costs since we use less material. It also reduces the weight of Click & Carry, which saves on shipping costs.

What company(ies) do you consider to be innovative today?

I am impressed by Apple and OXO. Both produce innovative products that are also aesthetically pleasing!

Fred Haney: Is Your Product Really Better?

Have you ever wondered what venture capitalist looks for in a startup? Or what is going through an investor’s mind during a pitch deck presentation? Continue reading if you want to find out! The SBEC is lucky enough to have Fred Haney as one of our mentors. He is a venture capital fund manager, private investor and entrepreneur with ample experience. As the founder of Monday Club, he regularly listens to pitches from hopeful entrepreneurs.

Here is what Fred has to say:
One mistake a lot of presenters make is to simply say their product/service is simply ‘better’ than existing competition. Of course it is, but that doesn’t really answer the question an investor is asking. An investor wants to know, “How much ‘better’ is it? Is it ‘enough better’ to prompt a customer to buy it?” And, “How do we know that it will be “enough better” in five years, or so, when we want to sell the company?”

The concept of ‘enough better’ is important. It forces the presenter to define and quantify what it means by ‘better.’ And it forces the presenter to confront the question, “How much better does a product need to be in order to compel customers to buy it?” Usually, ‘incremental improvement’ is not enough to force people to purchase. Products generally need to be 50% or 100% ‘better’ in order to get someone’s attention, and their advantage needs to be ‘sustainable’ over a long period of time.

As always, the SBEC is thankful to have such seasoned mentors on board that support entrepreneurship. Let us know your thoughts on Fred’s words in the comments!

Fred Haney: SBEC Mentor

Fred Haney
Owner, Venture Management

 

Christopher Braun: My Advice for Entrepreneurs

SBEC recently asked a few of our mentors to share insights with everyone about growing businesses. SBEC’s Chairman of the Board, Christopher Braun, shared some valuable ideas. Enjoy!

What is your best advice to start-ups and entrepreneurs?

Several things come to mind:

  • Develop a group of advisors/ mentors as soon as possible…they can help you avoid mistakes.
  • Don’t be afraid to ask a lot of questions.
  • You are not an expert in all fields and recognize and accept that you will need professionals to help you.
  • Surround yourself with people that are smarter than you.
  • Define your market succinctly.
  • Define your value proposition succinctly.
  • Articulate what your target customer looks like.
  • Become customer-centric

What are a few things you wish you knew when you first started your business?

  • Cashflow is key. You will need to be able to operate your business for months without receiving payment for your services.
  • Plan for cash flow to be a problem on start-up and during rapid growth phases.
  • Define what success looks like for you and your company.
  • Develop a Plan for the best and worst case scenarios for your business.
  • Be willing to adapt to many changes… all the time.
  • Continually strive to be the “go to” person for your industry. Be an expert.
  • Your clients, vendors, and employees can last a lifetime.
  • Be willing to accept there may be a better way to do something even though it may mean that your idea is not

What is the best decision you made for your business or professional career?

It’s great if you can join groups of unfamiliar people, be open to listen, and feel comfortable to ask for help from them.

 

Chris Braun: SBEC Mentor

Christopher Braun
CEO
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