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