Jun 02


Startup2angel.com is dedicated to helping startups and Angel professionals grow business and wealth by facilitating introductions and sharing how successful people work and how they have failed. That’s right: Failed. Every investor we’ve talked to says they learn more from failures than successes and we are here to aggregate that knowledge and help you navigate the landscape.

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Apr 18

To Patent or not to Patent

patent picture Whether the patent process is worthwhile and beneficial depends on the inventor, the opportunity and the timing. Deciding to go through with the process can be intimidating, costly and time-consuming. That’s why I decided to call Danielle Williams, an attorney at Winston and Strawn who has handled dozens of patent cases. Some of the benefits: 1-Disclosure becomes easier when talking about the invention because it’s protected. 2- Being able to talk freely gives investors more information and generates more interest. 3- The process of getting a patent forces critical thinking to identify what’s unique about it — and it’s often more than originally thought. 4- More people can be brought into the process without fear of betrayal. 5- It creates distinct understanding of ownership if there are conflicts later. 6-It creates a guarantee of a monopoly if someone tries to reverse engineer it. The existence of a patent has proven to benefit funding opportunities. “We’re able to show if a company had patents, there’s a significant increase in their ability to get first and second round funding,” she said. One reason it raises more money is because the inventor isn’t as restricted or hesitant to talk about the product. “It gives an entrepreneur the opportunity to speak about what’s happening on the other side, to talk to potential funders,” she said. Investors may be unwilling or hesitant to sign a non-disclosure form, which limits how much the company shares because saying too much will result in waiving rights to their secret. The existence of a patent eases the very real risk of saying too much and jeopardizing ownership. The cost to get a patent is in the range of $5,000 to $7,000. It may be difficult to spend that kind of money when the inventor is scraping for funding. However, there are organizations that will pay for the patent application in exchange for equity stake. “It’s a great way for folks who don’t necessarily believe they’ve got access. They can get access,” she said. Even the process of analyzing the product for a patent can identify improvements and unique features. “The depth and breadth of claims could have been more robust. If an entrepreneur gets the opportunity to talk with a patenter, they’ll be able to look at the invention not from one dimensional level but turn it over and look at all facets.” Those facets are a multitude of independent and dependent claims, system claims and method claims. From an investor perspective, the most pressing issue is having an understanding of ownership and scope of ownership. In many cases, the startup is two friends who implicitly trust each other and don’t plan for the breakup of business or friendship. Failure to prepare for that situation significantly increases risk for an investor. Another option besides a patent to lock down the technology is using trade secret protection. The difference is in the life cycle of the product. “If you think you’re on the cutting edge of certain technology and not sure where it’s going to go, you might go patent protection route,” she said. Meanwhile, if there’s an established market with an established product and you’re refining the products routinely with a life cycle of about two years, the best option may be moving forward with trade secrets. One option is to put together a patent filing and designate certain information in the filing as a trade secret. That makes sure everything is documented internally even before it’s filed. An advantage of a patent is even if someone reverse engineers the patented product, you can preclude or exclude them from market based on patent because you have a 20-year monopoly based on the claim. The law in this country gives preference to the first to file, not the first to invent. Timing is always important. “You’ve got to get your app in on file as soon as possible,” she said

Feb 20

The moment I realized innovation isn’t everything

common sense

By Solomon Brenner

One of the best parts of my investment life is writing this blog. I love talking to people, hearing their perspective and sharing those insights with other fans of angel investing. This blog is truly a passion.

It should come as no surprise then that my favorite TV show is Shark Tank, the ultimate celebrity of our genre.

If being on shark tank is the Olympic gold of angel investing success, Barbara Corcoran is the Michael Phelps. With her personality, her presence, she is the face of angel investing. There are parts of the show that don’t ring true based on my personal experiences with investing, but it’s still informative and interesting for when my own money is involved.

I heard Corcoran say something recently I hadn’t heard before and wanted to share it here on this blog.. She was doing in an interview with Entrepreneur Magazine and she said “innovative” isn’t her criteria for investing in something. “I like to invest in something that makes good common sense,” she said.

I love that, the simple, calculated assessment of an opportunity, not the flashy excitement of the next new thing. An idea that’s executed well, has good design and sound marketing is a smart investment. A business born out of the brainpower of a highly motivated small business. In a world where disruption and innovation are buzzwords, it was remarkable to hear Corcoran go back to the basics. Even in a crowded market, there are good opportunities to take those customers by simply doing a better job and being a better company. A saturated market is worth investing in if the small business has a smart plan.

Common sense over innovation. In the end, the innovation isn’t necessarily the new invention or process. It’s seeing something new and valuable in what’s already in front of you.

Feb 01

It’s not science. It’s success in quadrant 2 with Adam Carver from angellist

It’s not science. It’s success in quadrant 2


Adam Carver’s life experiences led him to the place where he is now, as an owner/operator with AngelList. One decision in another direction could’ve turned his career onto a completely different course. As he navigated his way through the investing world, he picked up insightful observations about how it works.

1-This is really an art. It’s not a science.

2- All of us have the same general principles: potential for fat margins, a big growing market, great founding team.

Because of the first observation, the second one becomes a bit more complicated.

Every opportunity, Carver explained goes into one of four quadrants:

Quadrant 4: You’re enamored with a product, the team is great and it meets all the criteria: High potential and innovative idea. You’re going to do that deal every time. But they’re rare.

Quadrant 2: Love founding team but unsure of product.

Quadrant 3: Obsessed with the product, but unsure of founding team.

Quadrant 1: Unsure of team and not excited by the product.

“I had companies that I love the team and not the product. Others where I love the founders, not the product. No way to really anticipate it at the seed stage.” That’s when the art comes in and those intangibles. The quandary is there aren’t many opportunities in quadrant 4. Most successes come in quadrants 2 or 3.

What Adam prioritizes between those two quadrants is character attributes of the most appealing teams:

– recognize their own assumptions

 -raise enough money for 24 months

-a business model with high enough margins doesn’t have to be high volume at onset to make pennies on dollar and get to cash flow on month to month basis.

-entrepreneurs have urgency to get to state where they’re not reliant on venture capital

In the end, having strict rules and overanalyzing options misses the point of investing at this level.

“You’re buying risk. This is a game built on uncertainty and you can’t win that if you don’t play.”

Jan 24

Mr carvers journey to becoming an Angel

Adam carver at AngelList

Adam carver at AngelList

Pt. 1 of 2

Every time I talk to someone for this blog, my first question is to ask them to walk me through the journey that led them to angel investing. They talk through their resume and muse about how a bad break here led to a good one there and everything lined into place to get to here and now.

I often enjoy those moments of hearing the journey, because while the advice I receive and share here is

invaluable, the life stories are always fascinating and at the heart of what investing is about. The people.

Take my recent talk with Adam Carver. In just a minute of quickly zipping through his life, he explained:

Started in financial

Discovered entrepreneurship at the University of Michigan

Worked with phD’s

Won a lot of business plan competitions


Entrepreneurship is an easy career

Ditched finance

Moved into startups

That didn’t go anywhere

Landed a job at “techtar?

Gained momentum

Wanted to try hand at investing instead of operating

Made a hybrid transition

In March moved over to AngelList, hybrid of operator/investor

 In just a few sentences, I heard a lifetime of decisions and movement and opportunities and ups and downs and turns and adjustments. While Adam’s journey is unique to him, the story is what life is about for all of us.

The experiences that shaped him will help determine what and how he invests now. He pointed out people use generally the same filter about choosing opportunities with big, disruptive potential and an air of excitement. But which investment fills that description is a very subjective determination. Investors have to figure that out for themselves. Create your own assumptions, iterate on those, hypothesize, identify good character traits, believe. Keep the faith for two to three years to find out if you’re right.

“Figuring it out in investing is a very expensive experiment.” But it’s worth every step of the journey.

Jan 18

The mistake we make reading body language

We asked business psychologist Merom Klein (Bio at the Bottom) for that subtle clue people reveal about their nature through body language: the head nod, rushed speech, eye contact.

His answer: “The big myth is that you’re going to be able to read body language or an intonation or someone says ‘um’ or they gesture in a certain way and there’s the magic thing that will tell you this is an entrepreneur that you can believe in or this isn’t. The fact is many of us have these kinds of biases of what we look for. If you look at the research they are incredibly unreliable predictors of future success.”

If it’s not a wink, cough or crossed arms, then what is it? So many entrepreneurs come in with great ideas and vision, but some are better prepared for a successful run.

Here are a few things that he looks at:

Can you have enough of a dialogue with this individual that you can open the door and do a good assessment of what they’re about.

What’s their skill set and their experience? Not just their background, but what have they actually done and achieved?

What hurdles have they faced and how have they overcome those?

How do they negotiate?

How do they meet timelines?

How do they understand your requirements as an investor?

Can you tell me where you’re going to need other people with greater know-how than yours and show me how you’ve hired and relied on talent like that in the past?

“I think that’s magical thinking. It concerns me we choose presidential candidates based on that. ‘I liked his tie’ or ‘I didn’t like his toupee’ or ‘I thought he was too slick.’ Instead look at the plan this entrepreneur is telling you they’re going to execute in order to create wealth and ask questions like show me where you’ve done this, tell me about an experience, what hurdles do you anticipate.”

Like everyone, he has passed on good opportunities and invested at times when he shouldn’t.

“It always came down to the people. It was hardly ever the technology.” He invested in one company whose technology couldn’t be supported by the market. But the team was agile, used their resources to pivot and came up with something that is better adapted to today’s market. As a result, he doubled down on his investment.

“That kind of agility, that kind of learning, that kind of looking reality in the face, saying it is what it is and being excited by the possibility rather than defeated and frustrated and put off because the market isn’t what you thought it was going to be, that’s going to make that company a success.”

Thank you Merom for your insight
Merom Klein PhD, business psychologist and serial entrepreneur, wrote the book about Courage to PowerUP Brilliance™ for real innovation. For 30+ years, he’s equipped C-level teams to delegate, empower, trust and ennoble their best and brightest stars to Lead from the Middle, accelerate post-merger integration and drive innovation. And he’s equipped mid-level leaders to step in, reach out, take charge and seize big new opportunities in matrix structures and cross-functional global innovation, talent management and M&A integration teams.

Jan 18

Agility vs false confidence: The $85 Yukon watermelon

The Financial Post reported about a rare delicacy, a watermelon, flown in to a grocery store in the Northern Yukon. Like a sleek Italian sports car, it sat in the showroom – too expensive for any local resident to buy. Residents asked if they could buy a single slice, and the store manager refused. Until the melon rotted and had to be pitched in the bin.

What’s this pitch got to do with pitching your high-tech innovation to investors – and to KOLs who should be early-adopter customers and champions?

Listen and learn. Be agile enough to rethink your assumptions about the value proposition, the customer experience and the total cost of ownership. Be ready to offer your product in slices, rather than in one single $85 package, or as part of a meal, rather than as a stand-alone. Face reality if it isn’t selling – rather than claiming to be “right” and refusing to be daunted or dented by criticism.

If not, you could have the sweetest and rarest fruit in your addressable market. Something everyone wants to buy and try. But with a business model that’s so prohibitive that one is willing to embrace the sweet fruit that you’re selling.

More than anything else – what savvy investors and corporate sponsors will want to see is your agility. They’ll want to know what feedback mechanisms you’ve put into place to be a few steps ahead of your customers, but not on a different planet altogether. And to start where your customers are, and bring them with you – rather than asking them to take a giant $85 leap of faith.

Check it out on LinkedIn >> https://www.linkedin.com/pulse/agility-vs-false-confidence-85-yukon-watermelon-merom-klein?published=t

Dec 16

The answer to success or failure… It’s always the same:


The answer to success or failure… It’s always the same:

“It’s always the entrepreneur. Who are the people? To me, that’s the whole thing.”

That’s what Tim Keane said about halfway through our conversation. The first few minutes, he talked about the intricacies of a QSBS exit strategy without having to pay capital gains taxes. You can’t be an LLC, have to be a C Corp, there’s a 10x gain limit and have to hold it 5 years. Certain industries, stock buy backs and acquiring stock from a 3rd party are disqualifiers. Faltering on any of these criteria will end the opportunity quickly.

All this knowledge of complicated strategy for maximum benefit, and it’s all an aside to the main point: the people. It’s not about intricate knowledge and carefully working a strategy based on laws and stats and spreadsheets. It’s the people.

Tim is part of an angel network successfully investing in entrepreneurs for the last 13 years.

He has concluded that the entrepreneur is the pivotal factor.

“It’s what they do 100 hours a week. Who is this person, do they have a reputation for integrity, is what they’re saying true?” he said. “Why they want to do this is important, what their passion is for the business and where the idea came from.”

Honesty and full disclosure go a long way. The passion for the innovation has to be combined with real business skills.

“Can he lead a team, will people follow him? Can he hire talent, is he in it for the long haul, does he have expertise?” he said.

If the answer to all of those questions is yes, the next step is figuring out if it’s a good fit, if Tim’s team can bring meaningful help to have a positive effect.

“We tend to be at $1 million the first go round. We say we’ll be back future rounds,” he said.

Dec 12

Title: An unaffordable omelette, one empty pocket and hustle

Title: An unaffordable omelette, one empty pocket and hustle

It was the mid-1990s. Before 6 Degrees of Wayne Kimmel, he was a man, in a hotel lobby, hoping to catch a break. The business elite in town were all around him eating $18 omelettes. Kimmel couldn’t afford one. He had one empty pocket and another full of his own business cards. His goal was to empty one pocket and fill the other with cards he collected. Maybe someone would even invite him to enjoy a meal.

It’s all about the hustle.  Deal flow is all about hustle.

“It’s part of my overall philosophy. It’s all about networking, going out, making contacts and developing relationships. Being in the business world. If I need to raise capital I have to go to places where people who have capital are,” he said. In those days, it was crashing breakfast at high-end hotels.

“I would get as many contacts as possible and turn those contacts to relationships.  I would introduce myself to almost every person that walked into this restaurant. I had to then take those contacts and get an opportunity,” he said.

And the opportunities came.

He raised $20 million in his first venture capital fund at age 29. He has sold businesses to a list Fortune 50 companies. He helped to get Microsoft to put its second reactor in the world in Philadelphia – the first time a major tech company from outside the city put down roots here.

Some of those early connections hinged on finding something – anything – in common. It could be a sports team, similar charity interests, a town visited, something both people care about.

“Then it’s sitting down and figuring out ways you can help each other. That’s the question – how can I help you and how can you help me and how can we make this a mutually beneficial connection? It’s not a one-way street.”

“You gotta be nice to everybody, you never know where your big break will be coming from or where you can help someone else.”

Now when he casts a net to find people to work with, he has a more refined idea of the qualities he likes to see in business partners:

– Smart entrepeneurs trying to change the world.

– Nice, the kind of people I want to have a conversation with.

– If the idea is big enough to be game changing, world changing, I’m in.

Oct 19

Show me something besides money



Investing according to Frank…….

He has a private equity fund, specializing in markets such as manufacturing, metal trading and medical devices.

Their philosophy of investing is based on 3 principles:

  1. Work with excellent people with a proven track record
  2. The people who are partners also invest meaningful amounts
  3. The fund team can add value besides money: experience, expertise, network.

“We want to positively influence the investment,” he said. For his team to commit to an investment, both sides have to contribute to the other’s role. The entrepreneur has to invest more than sweat equity. The entrepreneur has to be financially invested in the pursuit. On the flip side, the investor has to be able to contribute more than money.

He said his biggest failure came from violating that principle. A company had a great environmental technology, but the founders weren’t invested and the company went bankrupt. Nothing was salvaged except for a hard lesson.

“It was too much of a hassle to put in more money and build a new team. We decided we’ll do that for other investments.”

Best exit: quadrupled an investment in two years.

Due diligence strategy:  Build a team around you with expertise.

Biggest mistake: Too likely to believe in success of entrepreneur

Biggest mistake for entrepreneurs: Don’t understand how investors think

Why Keiretsu?: Inflow, structural good deal flow and rigorous due diligence process

Investment philosophy: Every investment should generate a good return.

Thoughts on waiting it out: The vast majority of good startup companies deliver slower than promised. There’s still time.

“The best one I hope is still to come.”

Sep 06

It’s not hunger or grit. The one thing that determines success


I read David Rose’s New York Times bestselling books: Angel Investing and The Startup Checklist.

Then I wrote my own checklist of things to do:

  1. Call David Rose
  2. Ask him to do an interview with me for this blog.
  3. Find out what else he knows.

Why did I want to talk to him so much? I’m hungry for knowledge and still climbing in the angel world. Meanwhile, he’s at the top of it. He’s a 3rd-generation angel investor who learned the business as a pre-teen. He’s the founder/CEO of Gust—the global platform that powers about 1,000 investment organizations connected to half a million early stage startup companies in the world of organized professional angel investing. He wrote the definite guide on Angel Investing. He invested in over 90 companies in a lifetime of successes. He’s an associate founder of Singularity University, a Silicon Valley think tank and business incubator teaching the next generation of leaders to solve energy problems.

For Rose, he explained that any deal hinges on founders with these traits:

  1. INTEGRITY. It’s a real business challenge. With an entrepreneur in a startup world, it’s all based on this person.
  2. PASSION. It’s necessary because it drives you. You get no work life balance. Otherwise you won’t have the gas in the tank to get over the hump, because there are a lot of humps.
  3. EXPERIENCE. That shows leadership ability.
  4. COMMITMENT. The one thing I’m giving increasing credit to these days is commitment, being willing to get up when you get knocked down again and again and again and again and again and again and again and let nothing stop you and drive through a wall. That’s what tends to separate them. It’s more than grit. It’s commitment. Keep going after everything tells you to give up. Bad things happen to every entrepreneur. It’s very easy to give up. Unless you can push through you’re not going to get there.

Not grit, but what about hunger?

“I don’t think that hunger is particularly critical. Exhibit A is I’m talking to you now. I grew up comfortable, done well in life. I’m eating in a fancy restaurant in Manhattan. Am I hungry? No. Do I have passion, drive, commitment? Absolutely.”

He knows every twist and turn of the angel investing roller coaster, from the exhilarating rush to slowly stalling on the tracks.

The peak of the mountain was a video company: “Angels wrote a check for $500,000. That’s all they needed.  Broke even within 9 months. We stayed there a few years, put money back into the business. Sold it for $130 million. It was single digits valuation at first.  That was a very, very nice deal.”

The valley was a promising app deal until the co-founding developer dropped out in 90 days: “We suggested very nicely to the other founder to bag it and return what money you could. Like a decent entrepreneur, he was committed wanted to see it through. We said OK. He spent 2-3 years valiantly trying to make a go of it. The company faded out. That was a misreading of a cofounder. All you can do is pay more attention and see if they’re really committed. He said all the right things. Hindsight is knowledge. I talk more about goals and economics in the future. Human factors are the one thing you can’t really structure against.”

Rose is an angel investor, entrepreneur and futurist. Across all of his investment interests, he said his philosophy remains consistent.

“I do scalable platform plays. I don’t do medical technology because I don’t understand it. I don’t do fashion or music because I have no fashion sense. Don’t do alcohol or tobacco. Life is too short. Gaming interesting, not my shtick. I’m not a foodie. I don’t do food deals,” he said.

“At some point you know what you think it’s worth, you do it — and if not, you walk away.”

Thanks to his influence, encouragement and knowledge, I’m hungry for even more commitment.

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