‘Give me a million dollars.'”
The first question to be asked is, who is giving the grant?
I asked a young man from a tech company that’s building a new service that’s currently in an open beta but is still a project in testing. He said it was me for being a young engineer and for my knowledge. He was the first to raise his hand before he was asked any followup questions.
While the initial discussion was about the technical merits of the startup, the same question arises every time we meet with the startup: who are they? What do they contribute?
This question is important, and so it shouldn’t be.
The good news is that most of these questions are likely to be answered during conversations.
“I’m not asking ‘What do you do for the company?’ or ‘Who are you?'” says J. Paul DeBungee, who heads up one of the first startups to make the transition into VC.
“The first question is, who are you?”
DeBungee leads the Center for Early-stage Capital at the Booth School of Business at the University of Pennsylvania. DeBungee will join my conversation about early-stage ventures for Forbes once he gets around to explaining the definition for “early.”
The good news is that the majority of founders want this distinction. But for those who never wanted the label to begin with, it is a reminder of the importance of making a connection with someone on the outside before investing.
“If I was to buy the land or build the company, there is no one there to talk to for money,” DeBungee says.
When I asked DeBungee who he spoke with about the company, which had recently turned $50,000 in seed funding into an ongoing $300,000 seed round he couldn’t name any names. But he told me it seemed like a pretty wide swath of investors and angel investors had talked to him about it and that he saw little value in a public deal.
The first thing he would ask is, “Who are you?”
The second thing he would ask of potential investors is, “It’s not a publicly traded company yet…What do you have to lose? Are you investing money for something that will be worth $1 million?”
You want to know if you are, in fact or in your heart, working with an entrepreneur who can and will make your experience valuable for many
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