VC says yes, but only with an angel...

[adam g]

Got a nice problem, just don't know the best way to move forward. I have a litte idea for a mobile phone product and we now have 3 VC's saying in principle they will fund us. We have distribution agreements already in place and pretty much everything we need bar one small thing....

The VC's will only fund when we have a working prototype for which I need around £250k. So I am off to see some business angle netwrks next week. Some charge registration fees, some don't. Some seem pretty clued up and some just seem to be a vehicle for ripping off ideas and cash! Anyone got any experiance with this area and could anyone suggest a couple of reputable Angel networks.

Any advice would be much apprecaiated.

Cheers

A

[JamieBeeston]

Not dealt with it so much, but a friend had to when trying to get funding for his business.

He said is was a most infuriating experience, with the Angels trying to get as much out of him as possible, for as little as possible. He could never get them on the fone, but when they wanted him, he had to drop everything to chat to them there and then.

GL with the Venutre.

J

[456mgt]

Angels and VCs are oil and water. Know a few of these angel networks and TBH most are hopeless. Even when you do find a good one, the difficulty for angels is that if the business needs a lot of capital (>£1m) the VCs coming in will dilute the angels all to hell and they'll end up getting shafted. That's probably why they ask for so much of the business, especially if it leads to silicon.

Pop me an email if you want to discuss it.

Kevin

[jeremyc]

It might be worth trying your friendly VCs to see if they have any personal contacts who might be in a position to act as an angel: often they stay in contact with those who have already made their millions.

Consider also approaching some of those who have made money in the same technologies and/or market - they are much more likely to understand your proposition and may also provide a route to market for your product. An obvious example might be Charles Dunstone (Carphone Warehouse) in the mobile phone space.

In my experience a lot of angel investment is made through personal contacts rather than 'cold calling' in networking arrangements.

Good luck!

[adam g]

thanks for all the advice so far - all very helpful indeed. I did make a few calls to some networks thuis afternoon and got a fairly god response. Also asked the VC firms to put as in touch with some as was suggested. Any more advice would of course be gratefully received.

We are waiting on an intro to Carphone Warehouse from another of the big phone companies who supply thm so hopefully we should get a second distribution deal tied up soon with them. Just so want to get this thing up and running and seems as though we might make it if we can solve this one final problem.

Kevin - YHM

>> Edited by adam g on Friday 28th October 22:45

[srebbe64]

adam g said:

The VC's will only fund when we have a working prototype for which I need around £250k. So I am off to see some business angle netwrks next week.

Take this the right way, but make sure the VC's aren't simply "being polite". Reason being, their comments are the sort of thing I'd say if I wasn't convinced by the idea but wanted to keep the door open in the 1% chance the person may have a proposal worth investing in.

Whatever the reason, good luck!

[Size Nine Elm]

Pre-2000 and the tech bubble VCs and Angels would invest in anything.

Nowadays VCs will rarely invest in any first round funding - they want the initial risks removed, and will accept that they lose the returns. Angels can and will get involved, but they will want a return, not just on the investment, but also risk compensation - if they are investing in 3 companies as first-round investors they're probably going to lose 2 of them, so their share has to be high enough to compensate.

It's the usual story of "better to have a small slice of a big cake than a big slice of no cake".

Also be prepared for a variety of Angel types - some are happy to put some cahs in, others want a more active/auditory role, this may take some of your time and effort.

HTH

[adam g]

I actually would not have a big problem if the angel wished to contribute their skills, assuming they are relevent of course. While I m comfortable I can make this work I am not stupid enough to turn down input from an investor as one assumes they would have expertise in areas that I may not.

Great advice chaps - please keep it coming! I have made a few very interesting calls and contacts over the last few days. I hope things will progress but obviously I have to wait and see and I have a lot more calls to make.

A big thank you to everyone for your advice and assistance to date.

[andymadmak]

I have used VCs and a couple of Angels in the past. (tech start up company) and my experience is that you need to talk to quite a few before you find the right one. Terms can vary hugely. Avoid those clubs that insist you pay to register.
I know a couple of people who have invested in early stage telecoms tech companies in quite a big way. Their rational for investing was quite different to the VC boys.
E mail me through my profile if you want any more info

Andy