| Within days of posting on one of the many | | | | me, my particular venture falls into the |
| websites created for entrepreneurs to post | | | | categories of both a startup and a highly |
| summaries designed to draw the attention of | | | | uncommon business sector for Angel |
| potential investors, an email inquiry from | | | | investment. Add to that our need for $3 |
| the AngloAmerican Investment Group and one | | | | million in funding and the combination scares |
| Anthony Oppenheim. Mr. Oppenheim explained in | | | | most Angels groups away, let alone individual |
| his email that from his Peachtree St. office | | | | investors. Three million dollars starts to |
| in Atlanta, he represented a consortium of | | | | encroach on the institution investment |
| private investors and mostly European family | | | | landscape controlled by venture capitalists |
| trusts that were specifically looking for | | | | and investment bankers. Five million dollars |
| investments in globally oriented businesses | | | | is the limit for most Regulation D offerings |
| like ours. They don't charge any up front | | | | without getting into investor sophistication |
| fees to review business plans. They represent | | | | requirements. Get into that arena and be |
| the decision makers and can write checks for | | | | prepared to invest in the high five figures |
| the right investments, etc. Please call him | | | | just to get started looking for more money, |
| to discuss the venture.Wow! Could we be that | | | | with no guarantee. Who are these |
| lucky? Although the email came from a | | | | entrepreneurs that have that in their back |
| Comcast.net address, it's not unheard of for | | | | pocket? No one just getting started, that's |
| even big investors to use common email | | | | for sure.So what are the alternatives when |
| addresses. It contained phone numbers and | | | | there are no rich Uncles or neighbors that |
| address information that matched the Atlanta | | | | just won the lottery and don't know where to |
| area and surely a huge conglomerate like the | | | | put their money? I can only speak from |
| Anglo American Investment Group would clamp | | | | experience in that finding one or two true |
| down quickly on any scam artists brazen | | | | believers that have a network of accredited |
| enough to openly use their brand. We were | | | | investor type clients or friends is your best |
| pretty excited.A phone call to Mr. Oppenheim | | | | bet. Six degrees of separation no longer |
| gave good reason to believe they were for | | | | applies thanks to the internet. I'll |
| real. A professional demeanor, the right | | | | guarantee you know someone who knows someone |
| questions asked and quick answers to any | | | | who knows a likely investor. The trick is |
| concerns we had. They invest in people as | | | | getting the word out without alerting every |
| much as projects. We'd be invited down to | | | | would-be competitor, idea stealing piracy |
| Atlanta to meet him and his associate Al | | | | gang or scam artist that will nickel and dime |
| Dubin ("D-U-B-I-N, yes that's the correct | | | | you to death. Truth be told, that's a high |
| spelling" the conversation went as I took | | | | wire act of its own.There are literally |
| notes) and review our business plan in | | | | hundreds of websites advertising Angel groups |
| detail. FedEx 10 copies of the business plan | | | | or supposedly acting as a clearing house for |
| before coming down. A non-disclosure | | | | Angels to search for investments they're |
| agreement was not a problem. If they like | | | | interested in. You can quickly spend tens of |
| what they see and hear we'll quickly see a | | | | thousands of dollars in submission fees or |
| Term Sheet. He'd send details about the | | | | retainers for individuals or groups that will |
| accommodations in Atlanta."Awesome" my son | | | | claim to have a professional team that will |
| said.Then things took a strange turn. The | | | | "evaluate" or screen your business plan |
| next email read like a bad mass mail piece. | | | | before they allow you access to investors |
| They had reviewed our business plan | | | | even online. In reality many of these |
| (funny...we hadn't sent them yet) and were | | | | websites are simply an introduction to |
| prepared to invest the full amount. They | | | | someone that will drain your bank account as |
| boasted about investments made in places like | | | | they offer to take you to the next stage or |
| Shang Hi (interesting spelling for Shanghai). | | | | introduce you to "real" investors.Even some |
| A request from us for references or contact | | | | fairly well known Angel groups claim a |
| with legitimate past investments as our real | | | | qualified screening process that is really a |
| due diligence kicked in resulted in a email | | | | single individual that, unless your business |
| that asked us to supply more information than | | | | plan happens to be that person's flavor of |
| even the government knows about us. And | | | | the month, often even the best ideas don't |
| unfortunately Mr. Dubin's name had suddenly | | | | make it through to the real investors' eyes. |
| changed to Dublin.The jig was up.One look at | | | | So ask lots of questions before you pay any |
| would have saved us some time since these | | | | fees and understand exactly what you get for |
| characters have been at it for a while and | | | | your money. Talk to entrepreneurs they claim |
| apparently the con is to get entrepreneurs | | | | to have funded and find out how their process |
| desperate for funding to believe that Anglo | | | | really worked.There are several directories |
| American will gladly fund them if the | | | | of legitimate Angel groups and investment |
| entrepreneur will pay the travel expenses of | | | | firms. One that I found fairly comprehensive |
| one of their representatives for site visits | | | | is And there are software applications that |
| and setting up an offshore "escrow" account | | | | are available to let you slice and dice who |
| for safe keeping of the funds until the deal | | | | you look up by stage or sector or geography |
| is done. Upwards of $40,000.Entrepreneurs, | | | | or any number of other demographics. |
| like most creative people, are an odd lot (I | | | | |
| can say that being what's called a "serial" | | | | Posting any venture information online is |
| entrepreneur) and matching them and their | | | | dicey if you're not familiar with securities |
| projects with them right Angel investors is a | | | | laws. Have a good securities attorney review |
| often a long, incredibly frustrating and | | | | anything you post to ensure you don't step |
| expense process. Hundreds of ideas die on the | | | | over the line of selling securities without a |
| vine for lack of the life giving flow of | | | | license. Don't be telling people they can |
| cash. And anyone who thinks the process is | | | | expect an average of 90% annual return on |
| easy, has had way too common an idea, asked | | | | investment, even if it's true. Unless you |
| for way too little investment and probably | | | | like orange jumpsuits, of course. Even |
| given up way too much equity.The costs of | | | | seemingly innocuous language sometimes pushes |
| raising capital to start any business from | | | | the boundaries of information to |
| scratch are mind-numbing. If you're doing a | | | | advertisement.And then of course we come back |
| securities offering in even the most basic | | | | to the interesting inquiries you'll get by |
| form, a good attorney will be $200 per hour | | | | posting information about your business |
| and up. And your accounting firm better be | | | | online. From the Malaysian doctor who invites |
| top notch as well. Want a Private Placement | | | | you to fly to Kuala Lumpur (at your own |
| Memorandum? Better have a nice house that | | | | expense) to seal the deal without ever having |
| you're willing to mortgage to the hilt or | | | | so much as spoken to you on the phone. To |
| sell that brand new Lexus in your driveway | | | | Vernon Jones who has $6 million given to him |
| that you paid cash for last year. Wait a | | | | by a woman in Libya that happens to be stored |
| minute. You don't have either one of those? | | | | right now in the Bank of Ghana, but calls |
| You spent every penny of extra cash you had | | | | from a rented house with a phone number owned |
| to developing your idea to the business plan | | | | by someone named Neomia Green. Or the |
| stage?As my cronies from the Great Lakes | | | | gentleman from Thailand that was surprised to |
| states say "You're S.O.L." The days of | | | | learn that I actually called the company in |
| investing in just a concept are long | | | | Australia whose email address he was using |
| gone.Today it's all about proven business | | | | illegally, and still claimed I judged him too |
| models in the form of an already operating | | | | fast. It's always amazing to me that these |
| business generating some form of revenue from | | | | con men assume that their marks don't know |
| somewhere. The friends and family round of | | | | how to use Google.Or that Anglo American |
| funding completed and likely one or two major | | | | bunch, who by any other name, still reeks of |
| investors from your own network of wealthy | | | | a scam.The sad part is that apparently the |
| folks is the sweet spot for attracting "early | | | | authorities don't have the man power enough |
| stage" Angel investment. And some sectors are | | | | to snare these low level n'er do wells since |
| naturally sweeter than others. Being situated | | | | we continue to get emails from these crooks |
| near the Research Triangle Park area of North | | | | despite calls and emails to various law |
| Carolina, a virtual incubator for bio-tech, | | | | enforcement agencies.The bottom line is that |
| life science and high tech business ventures, | | | | it really does take money to make money, even |
| trying to sell local Angels on an idea for | | | | if it's not your own. The economy is headed |
| the formation of a new insurance company, no | | | | in the right direction for entrepreneurs of |
| matter how sexy the plan, rarely even makes | | | | all sorts, but understand the process and |
| it into the evaluation process. The Angels of | | | | cost of raising outside capital before you |
| Silicon Valley look mostly for ideas in a | | | | get into it. Find yourself a mentor than has |
| different sector that needs no description.In | | | | been through the entire process. Ask a lot of |
| fact, most Angel groups will readily identify | | | | questions and learn from their mistakes.After |
| those business ideas that they're interested | | | | all, the wheel has already been invented. |
| in and those they're not. Unfortunately for | | | | |