Angel Investment Journal - Angel Investing and Entrepreneur Blog

VentureHacks has a good post discussing ideas to consider when you are determining whether you should raise debt or equity for your company.

Paul Graham has a great piece called The Hacker’s Guide to Investors. He makes a lot of great points, but a very interesting point is this:

“A high valuation can be a bad thing. If you take funding at a premoney valuation of $10 million, you won’t be selling the company for 20. You’ll have to sell for over 50 for the VCs to get even a 5x return, which is low to them. More likely they’ll want you to hold out for 100. But needing to get a high price decreases the chance of getting bought at all; many companies can buy you for $10 million, but only a handful for 100. And since a startup is like a pass/fail course for the founders, what you want to optimize is your chance of a good outcome, not the percentage of the company you keep.“

In addition, a valuation that may be too high may make it difficult if you need additional funding. Mainly because the initial investors want to see that their investment has increased, so they will expect the next round to be higher. However, if you increase the valuation too much, it makes the investment less attractive to the potential investors in the next round.

I student taught (in the second grade) and one day I had the class lined up and ready to leave, but we had about 2 minutes before the bell rang to let them out to the bus. As you probably know, 26 second graders standing in line is an eternity. So I asked them a simple question. “What are 5 things you learned today?”

Every hand shot up and we got to the fifth thing right before the bell rang. The interesting thing was that we had a quiz a few days later. One of the questions on the quiz was something one of the kids brought up when talking about the 5 things they learned that day (it was a coincidence, I didn’t plan it). EVERY kid got that question right. I like to think it was because I was such an awesome teacher, but in reality, it was more likely a result of the kids reflecting a little on their day and about what they learned.

As many people will tell you, experiencing something is probably the best way to learn something (and that is usually done in the form of a mistake). But one problem some people have is that they don’t learn from their experiences or mistakes. That is likely because they do not take time to reflect on it. Without reflecting, hopefully you will learn something subconsciously, but taking time to think about what it is you learned and defining it is a much more effective way to learn.

You probably have the chance to learn 50 things every day, whether they are new or just reinforcements of what you already know. The problem is that most people don’t actually get as much from the day as they could since they don’t reflect. Everyday at 4:45pm, I have a reminder that pops up reminding me to “Reflect” for the day. So I try to think about what it is I learned that day and I write these things down in a file. Some are from reading (blogs, books, magazines or something else), some are concepts I come up with as a result of something that happened that day, and others things come out by accident (maybe while driving).

But even though I take the time and effort to reflect, define what it is I learned, and write it down, I still have the challenge to get myself to go back and read what it is I have learned for some reinforcement.

I decided to do this post as a result of a post on Brad Feld’s Blog - I’ll Never Do An Investment In That Kind of Thing Again.

The Business Plan Archive has a nice post about lessons that should be learned from the Dot Com Meltdown.

Technomagic tells you why you should make something people want.

GoBigNetwork, a resource connecting entrepreneurs seeking and investors, has a post talking about what start-up offices look like.

Redeye VC discusses the concept of failing cheaply.

Congress is discussing passing legislation that would give tax breaks for angel investments. Tax breaks are given to corporations for a variety of things and they get tax breaks for moving (or keeping) a factory in a certain city, state or even the country. But how much does keeping factory jobs in the US actually help the economy? Companies that are pursuing new ideas and innovation are things that have grown this country (and others) and encouraging that type of activity is a fantastic way to continue economic development.

A lot of the time people will give you one of  two reasons as to why they don’t like your idea:

“It’s been done before”
“It’s never been done before”

One of those two phrases has been true of every idea or business that has ever been successful.

From Seth

There is a interesting piece on Paul Graham’s site posing the question, Why To NOT NOT Start a Start Up.

I heard good things about Start-Up School this year. I spoke with Ben Roodman, who runs a mobile social network start-up - ImThere.com with David Gorman. Ben attended Start Up School and said it was a great place to network. He even had a chance to speak with Paul Graham.

If you are a start-up, it may be a good idea to check the school out next year.

If you are a Warren Buffett fan like me, you will probably be interested to know Berkshire Hathaway’s 2006 Chairman’s Letter has been released.

h/t Feld

Like a normal college kid, I usually struggled to get up in the mornings to get to class while at Mizzou.

Since my degree was in elementary education, I was able to student teach in the second grade my last semester. People with other degrees did not understand the concept of student teaching. We had to work 55+ hours and dealt with 26 eight year olds with absolutely no pay. In fact, most of the time we bought our own supplies. This was happening while other students were getting 35-38 hour internships for the summer making good money.

Well, I absolutely loved it!

Keep in mind that I was still in college, meaning my partying was not restricted to the weekends. However, I noticed a funny thing on school-day mornings after a night of partying. Instead of going through the “morning struggle” of getting out of bed, I would wake up, usually before my alarm clock and (sometimes, literally) jump out of bed. The reason was because I loved teaching and I was excited to get to the school to get the day going.

For me, and likely most people, the desire to get out of bed is an indicator of how much I enjoy what I am doing. And, as most people will tell you, having a passion for what you do is one thing that will undoubtedly increase your chances for success.

“Your chances of success are directly proportional to the degree of pleasure you derive from what you do.”
- Michael Korda

How fast do you get out of bed?

The Myth of the Great Idea talks about the fact that a lot of people talk about starting up a company, but claim they need to find their great idea before they begin. He claims that the problem with this is that a lot of times it is just an excuse not to do something. No company can simply rely on a great idea, they need to be able to execute. A brilliant idea is better than a crappy one, but without execution, even a brilliant idea cannot succeed.

In addition, successful companies may start with a great idea (or at least one which they feel is great), but end up changing their focus as they grow and learn. I have been reading “Founders at Work” that has some very interesting stories about successful start-ups. The stories in the book support the idea that many companies change their entire concept as they grow. Most find a niche within the industry or with just one aspect of their company and change their entire game plan.

The most important part of a “Start-Up” is actually Starting. Start to do something and learn from it. Failing fast and often is fine (as long as you can do it cheaply).