The night before last, I had a particularly vivid dream: I was playing an unknown arcade game (actually, it was a vertical-scrolling “shoot’em up” like a desert-themed “1942” but with Cold War-era planes) and had just reached the end-of-level ‘Optimus Prime’-style Japanese robot boss when the machine abruptly reset itself and went into a pre-rendered attract mode. The sheer unfairness of being bumped like that made me so cross it woke me up, and then couldn’t get back to sleep.
Seeking funding can often feel like this, as if someone’s perpetually pulling the plug on you just as you’ve got really close to some notional end-line: but actually, that’s a bit of fallacy – startup funding is not a video game. That is, it’s not a solo puzzle activity where you battle against a rigid programmatic structure whose rules are designed to thwart, frustrate but then grudgingly satisfy your needs in the face of your persistence (and having written computer games for twenty years, I know plenty about those). Rather, funding is an extended Zen koan for entrepreneurs to meditate upon: if money makes money, where does money come from?
In many ways, this is a kind of high-level philosophical take on the whole ‘product/market fit’ thing, a problem to which everyone has to develop their own workable answer. At the same time, the paradox about UK business angels (and indeed VCs) is that the #1 thing they look for in a funding proposal is that it shouldn’t really need their money, the idea being that if they wade through the business plan slush-pile long enough they’ll eventually find a place to land their money without any significant downside. So you have to understand that the ideal investee – as seen from the other side of the table – is tech-savvy but street-unsmart, project-focused but management finance-unwise, brilliant but foolish. In a single word: gameable.
Hence, the real reason not to think of startup funding as a video game is that many business angels already basically do this – they’re trying to hack that part of the finance reality field that says you can never get supranormal returns with relatively little risk, by attempting to find gameable, “coachable”, dumb tech geniuses to exploit, in a market that they perhaps already know a substantial amount about. Of course, even if they succeed at this they’ll most likely end up with horribly unbalanced portfolios with exactly the kind of cross-dependencies that sensible economists would grimace at, but they don’t care. Stick to what you know, they tell themselves, and so they end up looking for entrepreneurs who were as naive and exploitable as they themselves were earlier in their career, as if exploiting others would somehow put right the wrongs of their own business life. In these terms, a lot of angel funding isn’t so much a video game as a repetitive recapitulation of their own personal theatres of cruelty, monetary sins of the forefathers inflicted upon investees, yea unto the nth tech generation. But you knew all that already, right? 🙂
So, be wary of all the people who tell you how to ‘perfect’ your elevator pitch, your pitch, your Powerpoint ‘deck’, or even (heaven forbid) your business plan, as if these somehow correspond to levels #1 to #4 of some weirdly passive-aggressive funding game. Sophistication is not necessarily the presentational merit you might think, and comes a distant second to intense, focused communication on the urgency, need, and opportunity of what you’re proposing. Ultimately, the most desirable proposition is simply one that angels would kick themselves down the street for a week for missing when it’s gone, a chance spurned that would laugh mockingly in their face for decades – basically, the horrible realization that turning company X down would be the worst mistake they’d ever make. All of which is nothing to do with anything except pure psychology.
What is it about your startup that would have that effect on angels?