Ask HN: The Secret Sauce of Angel Investment? | Hacker News Reader

Ask HN: The Secret Sauce of Angel Investment?

66 pointsgscott22 comments

I am a single founder who has put a lot of work into the product that I have.

Joining up with a YC type system wasn't going to happen for me for various reasons so I instead sought after some small investment money from individuals and that has worked for me. I am about to close another round and I wanted to share the document I used this time and the formula that I believe will work for people like myself:

The Formula:

1. Create a version that works good enough, 2. Add users, even if it is for free. 3. Continue to enhance the software, 4 Once you have some traction, find people who see the vision to invest in that vision

Once you have a strong product you can find people who believe in it and in you since you are the one who created the product. Your product lends you credibility.

I found myself needing more resources to get to the next step, which is to finish the programming for a vertical market on the officezilla.com system. I have been working too much to pay the bills and I needed some room to maneuver so I was stuck with selling off another 5% which will leave me with 90% of the company.

Here is the document I used to close the last amount I needed... I had a hard time with OpenOffice on the formatting and my grammer isn't great... but people tend to focus on the strengths of the system and not your grammer if your dealing with the right person.

The document: http://www.officezilla.com/officezilla2008.pdf

For the single founders out there, I am not nearly as smart as most of the people on HN but regardless if you have passion and don't give up you will be successful. I am not quite there yet, but I can see the light at the end of the tunnel and it is really pulling me forward.

Funding from a "VC" is next to impossible but there is money out there from angel investors, people who see your vision and like your product.

You are extremely impressive. We need 1,000 more hacker founders like this. This is, incidentally, exactly what Paul Hawken says he did for Smith and Hawken in "Growing a Business".

This is so awesome. I read this thread, upmodded it, and left. But somehow I started feeling really happy, and had to come back to write! We do need 1000 more hackers like this! Persistence!

I am not nearly as smart as most of the people on HN

All evidence to the contrary.

Excellent overview for a potential angel. May not tell them everything, but it's a good starting point for questions and discussion. It also shows that your "finger is on the pulse," perhaps one of the most important things.

I'm sure this will inspire other single founders. Thanks for sharing.

Great post. you followed some important start-up rules:

(1) get a prototype or "good enough" version out early and be prepared to iterate

(2) hit a milestone that impresses investors before raising funds. measurable customer traction is an impressive milestone

(3) only raise money when you need it, and make sure to raise enough to safely hit the next milestone that will impress investors

Amen to #2.

I'm stunned by the # of people who are in the "I have a brilliant idea and a couple of powerpoint slides!" phase who expect to get funding.

Yeah, and there continue to be lots of people in that phase. It's even more surprising because you'd expect the market not to give them funding, and eventually people would learn its not worth their time to seek funding at that stage.

So that means either some people are getting money with just an idea, or the market is really slow and inefficient.

I think this kind of bullshit is the new conventional wisdom. It all depends the idea. Ideas are valubale in exactly those cases where the idea is an elegant solution to a big problem.

There was a point where the Polio vaccine was just an idea. Would you rather of funded the polio vaccine or some crap web app that has a missing vowel in it's name with half a million users?

The thinking that an undeveloped idea is not valuable is symptomatic of the lack of vision in the tech world. People interested in elegantly solving big problems know a solid idea is way more important than a little traction. This thinking is wrong for a class of ideas that is essential for solving the big problems in the world that represent the best business opportunities. Silicon Valley and it's associated culture has become the new tired conventional wisdom. This is why silicon valley no longer solves big problems.

> solving the big problems

If you have a good presentation and can make a case that your solving a big problem will be financially successful I don't see why you couldn't get funding for it.

I am not solving the worlds problems and have nothing totally unique, so a little traction is more important in my case but maybe not yours.

I wasn't talking about your case in particular. These cases are different. I'm just saying that the popular (wrong) "wisdom" is that ideas are worthless, and that's an example of a pre-post fallacy.

I'm talking about the guy above you who said "I'm stunned by the # of people who are in the "I have a brilliant idea and a couple of powerpoint slides!" phase who expect to get funding." I may have replied to the wrong person! I think I was more with the guy I replied to. Sorry!

The very best business ideas will come from people with only an idea and a presentation because elegantly solving a big problem is both the best business proposition and the type of thing that requires only a well reasoned idea that simplifies complexity.

Can you tell us how you happened to find your first investor? Since he is in Italy it doesn't seem like this is someone you got through connections.

Through HN. I posted a document that I wanted to send to angel investors, I didn't get too much excitement from those who replied, they were not so sure it would work but some gave excellent suggestions.

One of the people "lurking" but didn't reply was this guy in Italy. He emailed me, personally I wasn't sure if he was for real or not but he turned out to be totally real. So that really moved me forward a great deal and I am greatly indebted to him. I have never actually spoken to him on the phone, we did all of this through email. Pretty soon I am about to register his 5% of the shares with Nevada so he is going to be good to go, totally official owner of 5%. I am presonally excited about kicking this thing into high gear and returning his investment many times over.

http://news.ycombinator.com/item?id=80773

What is a Pro Version?

"Finish “Pro” version. This is simply the current offering but with the menu moved to the top so space is freed on the width of the page for more user data. New features would go to Pro version users and not to Free version users. Eventually the pro version features would be very compelling."

Congrats on funding.

One of the biggest problems is with the left hand menu taking up too much room. People want to fill up the system with more data but there just isn't enough room on the screen. Since I give everything away for free, I had this amazing idea that the "pro" version would use a different template and not taking away anything from the free version it wouldn't have any new features yet but would as I make them :) So for the moment, the grand benefit is a different more usable template, longer term there would be "Pro" only features, everything that I do that is new, wouldn't get passed onto the free users so that I could have something for the Pro version people to be happy about (new stuff!).

Perfectly understandable, just initially, I laughed.

Just imagine telling users that a pro version is the same thing but with a different template.

Great work. This is a great advice for folks like us who are looking for some heads up. I know its hard, you have proven that with confidence and passion, nothing can stop you from acheiving what you want to

thank you a lot for sharing this!

Your story sounds inspiring. I'm just about to pull in some money from an angel kind of like you are. We are in a very similar boat. My start up in not software related though.

In the spirit of helping you to make your business better, I was much less inspired by your name. officezilla? Really? Maybe one problem of working by yourself is that there is no one to tell you when you are making a huge mistake you are blind too. Officezilla? You are pouring your life into something you are calling officezilla? You want that on your tombstone? The thing that was your life's work is officezilla? You can't find a better name for what will be your customers primary way of mentally representing you? This will have more of an impact on what people think of your product initially than almost anything else you do. I would suggest you use a little bit of the money to find a good person to help you pick a better identity for yourself. This is just an unacceptable name. I'm sorry, thats what I think. It's not the same skillset as the work you do for a website. But it's important enough you should change it, before your next round, in consultation with an expert, even if it's a really big pain in your ass to do.

Good luck with your funding and your business. You sound like the type who will be successful. I hope you change the name though. It is really bad. I'm sorry for being so harsh, but it really is an epic fail, and you really should recognize your limits and hire someone talented to help you change it. Good luck.

I own the domain "sharecircle.com" as well. I have been buying domains that fit for specific verticals like RealtyGoLive.com, etc.

I am also not hoping to have a tombstone http://en.wikipedia.org/wiki/Freejack

That's a start. The next step is to not present officezilla to anyone you want to think positively of your project. You look like you are doing very good work and are going to get a good shot at making it. It'd be a shame to have it unfairly tainted by that bad name. This matters a lot to how people perceive you.

sharecircle is much better, BTW. Like a million or billion or million million or million billion or even billion billion times better.

i'll defend the name, as it passes a few of my tests (here is another list):

First, the name suggests something about the product. When many people hear "office", they think "business" and "MS Office". When i hear zilla, i think of Mozilla, and the connotations are "free" and "quality". these connotations are perfect for a free calendaring and collaboration tool. "sharecircle" wouldn't provide the same associations with business and quality.

Second, the name is spellable without explanation.

Third, its memorable/differentiated

Fourth, you can grow into it. its not "calendarzilla"

fifth, its not too long

Yeah. But. Um. Those tests suck?

It's officezilla. The cadence is all wrong. Say it over and over again. Too much at the end. It flows like a boulder swims.

Normal people, when they hear office, think "I hate the office.", and normal people, when they hear zilla, think godzilla, which is not so pleasant in it's associations. Why would I want a bigger office thats like a giant dinosaur that messes stuff up? Officezilla sounds more to me like the way a therapist would label the kafkaesque reoccurring nightmares of a middle manager who wants to quit and live by a lake and paint, but whose soul is being consumed by recurring office work that takes all his energy in the same hopeless, pointless ritual he lives over and over again, the only change day to day being the slowly and constantly mounting frustration, then an inviting place I want to go each day to try and make something creative.

The way it works isn't does it pass a few tests. There is no set of rules such that meeting the rules is a necessary and sufficient condition for the name not sucking. The way it works is, consider the totality. Does it suck or not. This name sucks. Really strongly.

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