Making Friends: The Name of the Angel Game
I am on the advisory board of a company that is creating a very interesting software product. As an Internet-based product, it's in a white-hot market space. And because we're dealing with a one-of-a-kind product, the company is racing to get it not just produced, but sold.
But there is a problem. The market into which the company sells is considered stodgy. That means the folks the company really has to impress now, namely those with the money, aren't tripping over themselves to invest.
And let's face it. To get a product made and sold, you need cash. This company needs $120,000 a month for its bare-bones staff (project manager, technical leader, four developers, a sales and marketing person, a few administrators and executives), its bizarre rabbit warren of shared office space, and its passel of computers, Internet connections, Web sites, and fee-hungry lawyers and accountants.
In short, forget the venture capitalists. This is a fledgling with a "product" that's but a prototype and big dreams for changing an old-style business. It has to be creative about getting financing. And that means heading straight for individual investors with bushels of cash and plenty of dreams of their own: "angels."
It's Not What You Know...
Now, with a challenge like that, you'd think the CEO of this company would walk into our advisory board meeting every six or eight weeks, put his head on the table, sob uncontrollably, and say, "What have I done to myself?"
I'm amazed, however, that such a scene never happens. My friend understands the old adage, "It's not what you know but whom you know." What's more, he has plenty of friends of his own, and better yet, he knows how to make even more friends.
Every month, this CEO (he's young; his father is in the financing business; and he knows money inside out) raises between $60,000 and $200,000 because he doesn't concentrate on making money. He focuses on making friends. And that's the name of the angel game.
But Whom You Know
My friend starts each month with a panicked look on his face and an edge in his voice, but he pulls it off, month after month. I am eternally impressed with his ability to turn over a new rock, dig down deep, and pull out some more dollars. Just how has he done this?
Well, he has a list of people he calls on. He sends out an investment update. He has a roster of VC types that's about 50 deep, and he calls on those people for names of angels they may know. He has lunch with friends and friends of friends -- anyone with a pocket to pick. He has a list of some 100 people whom he is constantly working.
Every person my advisee encounters is a lead. Every person he meets is scrutinized and examined for information about other acquaintances who may have money to invest. And since he's in the entrepreneur-rich section of New York known as Silicon Alley, and he frequents equally verdant areas in Massachusetts and California, the people he either purposefully or accidentally meets tend to have connections who can help. His list of investors includes stand-alone angels, angel investor groups, friends, family, (and, to be fair, some bank debt and, I would imagine, a scary number of maxed-out credit cards).
Working the Room
When I started advising his company, I worried that he wouldn't be able to pull it off every 30 days. While I'm still not used to the idea that the company never seems to crash, I am now confident that every month the dollars will come in.
The CEO lives for the deal. He is always asking, "Who do you know?" If you give him a name, he calls, and, using your name, he either gets another name or gets something from the person. That's how he got to me, through a friend of mine. I, in turn, introduced him to other people.
As a salesman, he's good. Boy, is he good! He knows the product and the pitch in his sleep. He's great with analysts, and he has gained super press for a company without a product. He loves to leverage relationships. And he has huge passion for the company, the product, and his confidence that there is a need for the product.
All of which comes through in his communication with people. People want to see him and his company succeed, and they are willing to help him.
Playing the Game
In fact, this is my only concern about this CEO. His product will eventually catch the eye of the VCs, and I worry that once that happens, he won't know what to do!
Or will he? On second thought, I can't wait for the call when he says, "We got the millions! We signed on a VC!" Then he can unleash his tenacity, enthusiasm, and passion on his potential customers. He'll make the VCs happy, the company successful, and shareholders giddy over the increase in the value of their stock.
It's the name of the game!
Jennifer Lawton is senior vice president of consulting andtechnology at Interliant Inc., an Internet hosting company.Previously, Lawton was CEO of Net Daemons Associates Inc.,a computer networking and consulting firm she cofounded in1991. In addition, Lawton is an inc.com Personal & Professional Growthmentor.
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