Comment by amobilebiz | Hacker News Reader

Comment by amobilebiz | Hacker News Reader

Angelsoft has two business models. One is where they charge entreprenuers to essentially pitch their angel members. The second is they provide a platform for angels and even some VCs to automate their application process. With this model the process is free to the entreprenuer and the angel or VC covers the cost.

While I believe the first model is useless money spent, I do believe the second model is much better and entreprenuers should not avoid filling out an angel groups investment application based solely on the fact they use Angelsoft to process the application. I have utilized the process myself and while I did not get funding from (I did get face-to-face meetings though) the angel groups I submitted to I found the application process easy and organized. I am familiar with several groups that utilize the Angelsoft platform and all are very reputable.

Long story short, blindly sending your business plan to just about ANY investment group (excluding YC and similar models) is not going to get you anywhere. Introductions and networking are the only true way of having a chance at any investment. I can think of other things to spend the $250 on than a membership with Angelsoft. On the other hand, if you have interest in a specific angel group or VC and they point you to Angelsoft to submit your business plan, etc... know that (a) it is free for you; and (b) that Angelsoft is a legitimate platform for submitting your application.

Note that I have no affiliation with Angelsoft other than I have utilized their platform to submit to several VCs.

As the COO of Angelsoft and the creator of the Open Deals/The Investor Community, I can shed some statistical light on this question.

First let me clarify that since 2004 Angelsoft has been building tools that help Startups and Investors communicate more effectively. That's what we talk about every day. That's what keeps me up at night. Open Deals is one of those tools.

We originally released Open Deals as a way for Angel Groups to post deals that they wanted to do, but didn't have enough cash to do alone (This is a surprisingly common problem for these groups).

As Open Deals gained traction with our groups, we thought we could use it to solve another problem: Unknown entrepreneurs applying to groups and getting rejected because they were unknown. Most guys who are unknown are unknown for a reason, but obviously if you can never get an investment unless you've been successful before, we've got a problem.

We figured we'd encourage these new entrepreneurs to apply to Open Deals, let the investors crowd source them, and if a guy was legit, he'd get voted up and referred into some groups. Since he was referred, we figured the group might pay attention to him.

So has it been successful?

1. First, our marketing around it has sucked (and still does). We're more of software company and marketing hasn't come naturally to us. We're working on a complete site redesign coming out early in March we think will fix this.

2. Since we began we've had 243 companies referred from Open Deals to groups. That's about 25% who applied.

3. Companies that are referred from Open Deals are 225% more likely to get a meeting with a group than a direct submission to that group.

In short, Open Deals is doing okay. You guys are smart enough to figure out if it's worth $250 for you, but I can say, that for most entrepreneurs its more than worth the money. And I'm not talking about those that get meetings. A lot of entrepreneurs get dinged or ignored when they apply. We take some heat for that, but the truth is, these guys paid $250 to find out they're not ready for prime-time. And speaking as an entrepreneur who has spent thousands of dollars and years of his life pursuing ideas that were not ready, I can say that $250 is a bargain.

I think a cheaper way to figure out how ready you are for primetime is to submit your site to Hacker News. It doesn't cost a penny.

I appreciate and agree with most of your comments, but saying that $250 is a cheap price to learn the ropes seems wrong and somewhat predatory to me. I think you should spend time polishing your value prop if you have to fall back on this sort of rhetoric.

I think I'll follow pg's advice.

Submitting your site to Hacker News can yield insightful comments, new users, and potentially result in an investor taking some notice. That isn't the same as deliberately pitching investors, though. I don't see how charging a specific fee for a specific service in an up-front fashion like this is predatory. A barrier to entry such as the fee charged probably makes the quality of applications and applicants better. That being said, at this point, I can't imagine myself paying for such a service. I prefer to network the old-fashioned way.

as a investor using angelsoft, i think it is a great service for angels to manage their dealflow. however deals in angelsoft have not been too interesting, my guess is it will probably never be the top tier deal flow. However, you may need a ranking system (not crowd sourced) to bring the top dealflow to the top of the list, this may drive some activity.

as an entrepreneur, i think the $250 mark is not expensive IF we know who the investors are out there and how many actually read my documents and how many actually respond to it constructively. Paying and not getting heard/read/feedback may not be the way to do. I would not mind paying if the right group of investors read my summary and will pay more if they submit comments or questions more on a success base rather than upfront.

my 2 cents. cheers

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