Angel Investment Journal – Angel Investing and Entrepreneur Blog

Don’t be Conservative

Posted in Entrepreneur Advice,Funding/Investing,Startups by angel on the February 21st, 2008

I was at InvestMidwest this week and saw some really exciting companies. I was impressed by the presentations and it seems many of the presenters were either coached on what their presentation should include or they just intelligent entrepreneurs that knew what needed to be done.

Most presentations I see include one aspect that is so common it has started to frustrate me. It happens when the presenter gets to the part of the presentation about projections. They start talking about revenue projections and they present the figures, but say that they believe this projections to be “conservative”.

I don’t know why it frustrates me, but apparently I am not the only one that feels this way. Fortunately, I only heard one entrepreneur (out of 12) claim their projections were conservative. And, upon hearing this, I saw another investor look at his buddy and smile.

Why shouldn’t you use the word “conservative” when talking about your projections?

First, when coming up with projections, especially if you are a start-up, it is extremely hard to predict what you could actually do. But you should do whatever you can to support your projections. So don’t try to say you just need to get 1% of a gigantic market in order to experience huge success. Talk about what aspect of that market you expect to penetrate. But since it is so hard to predict, you probably don’t know what is conservative and what isn’t.

Second, why would an entrepreneur that is trying to “sell” the concept of his business and raise money quote conservative numbers? It is unlikely you would, so don’t try to make the projections look bigger than what you actually believe.

Finally, even if your numbers are conservative, don’t use the word “conservative”. Don’t qualify your projections at all or maybe use a different word like “realistic” if you actually believe those projections are within reach.

The Trick to Making Money – There is no Trick

Posted in Entrepreneur Advice by angel on the February 18th, 2008

While watching Citizen Kane last night, one particular quote in the movie made me think:

It’s no trick to make a lot of money… if all you want to do is make a lot of money.

Things are not as simple as that short phrase, but it does have a lot of truth behind it. If you have one goal and one concern in your life – to make a lot of money – it is very likely you will be able to do it.

The concept requires that you are willing to sacrifice all other aspects of your life (being the type of person that doesn’t care about any other aspect of your life will work just as well as having to make sacrifices). But most people want to make money to have freedom, to be able to do fun things, to not have to worry about money, etc. Money alone means nothing. You strive to make money as a result of the benefits of having money. But it is also true that you could have money and not have those things. This is why you need to stay focused on what you are ultimately seeking. Having a lot of money without a loving family or friends is probably not your ideal goal. Having a lot of money without having any fun along the way sounds like a pretty crappy lifestyle.

There is nothing wrong with being motivated to make a lot of money. Just be sure to know what you ultimately seek. Be willing to make smart choices about what you are willing to sacrifice, because success will likely require a lot of them. I was fortunate in college to have made smart choices in what I sacrificed. I never played video games in while some guys would spend hours a day playing them. I also made sacrifices in the amount of time and energy I put into school, which turned out to be a wise decision. Instead, my brother and I ended up building a solid company while going to school. I didn’t sacrifice going out and having fun and now I wouldn’t sacrifice spending time with my family.

Be sure you know why you strive for whatever it is you seek and make sure the sacrifices you are giving up are worth it.