The easiest “NO” delivered by our angel fund

I started an angel fund a couple years ago. The goal was to make an impact, stay tuned into entrepreneurism and make money. We haven’t made much money yet, but we haven’t really lost anything yet either.

The easiest “No” I ever delivered was to a group of cofounders who all drove luxury cars. Their idea was OK. We had our doubts about their ability to execute, but the hope was that they were coachable and so we set a follow-up meeting.

One co-founder drove up to my place in an Audi; one drove a BMW; one drove a Mercedes. The fourth co-founder was riding shotgun in the BMW. There was no need to spend time talking about where this company was going, because this company was already dead.

The luxury interests of the “startup” cofounders made it clear that our money was not going to help keep the lights on and pay a few server bills. Our money was needed so that these guys didn’t have to suffer a bit. They were not willing to go “all-in” on their business. They were not selling their cars, and it was safe to presume that they had nice garages attached to some pretty awesome houses, too.

If you’re not “all-in” neither are we. If you’re serious about a startup, be ready to be paid last. Sometimes it’s the only way for your company survive and to have enough cash to make it to the next round. At the very least, borrow your cousin’s crappy Corolla to roll up at your next meeting with your investors.

  • I don’t own a car. We live in a flat and we live well below our means and we bootstrap hardcore and I am a co-founder. We self-fund through consulting. Consulting allows us to at least have the option to buy a BMW. But I think this is a pretty silly reason to say no if they are driving a BMW. I am sure the dudes in the cars were also kind of lame or their pitch was wrong. There has to be more to it then their cars. But I can see the point. Obviously you wouldn’t fund a homeless person just because they are homeless…

    • It’s a generalization — if we loved their idea and were confident, we still would have raised eyebrows, but we could have gotten beyond that. The point is to take risk along with your investors.

  • What if they were early Facebook employees who had already sold a company after leaving Facebook? Would you still “raise an eyebrow”?

  • That’s a crappy way to look at it. Not all founders looking for investors are broke. They could be looking for someone to share the risk or advise or connections. Maybe they’ve invested all they can ‘comfortably’. What next – you carry an iphone-can’t you make do with a MotoRazr. Why a corolla and not the bus?

  • “If you’re serious about a startup, be ready to be paid last.” – I spent the first years operating my business this way, then after near total failure (another story altogether) I decided to pivot. I looked at what my minimum needs were and set myself a salary of $2k/month and PAID MYSELF FIRST. It was much easier to operate the business, deal with vendors, and focus on sales when I was not preoccupied with keeping the electricity and water on at my house….

  • Those guys were def sitting on some personal cash – but lets be honest – there are some angel funds that would give them $$$ because they drove up in a fleet of luxury cars rather than a group of guys with a great idea and revenue and crappy cars.

  • This, “You have to suffer for you art” crap is all bullshit. You judge based on the idea, the financials and the management team and the probability that you can make a successful exit. You want to lower your risk… guess what? Founders want to reduce their risks too. I’ll bet a shinny nickel if one of those co-founders rolled up in a beamer and had a nice short skirt on and a nice v-neck blouse and was a well put together blonde, you’d have your wallet and cock out before she she set down her laptop.

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