Re: Do we need a new funding model for starting businesses?

chilepp — Wed, 04 Jun 2008 14:12:50 -0000

Dear Taylor,

You are not alone. I'm the Treasurer/CFO of a late stage startup that has been able to raise $5MM from traditional angel investors only (traditional in the sense that they are every day high net worth individuals interested in a potential high ROI, and not in taking control of our company, or how that ROI is achieved, i.e. M&A, they have not become "institutionalized" like you mentioned in your article - I completely agree with you, most angel group presentations we've made feel like VC presentations - they expect the same terms and exit.

We believe in home grown businesses that are nursed and maintained by the founders. As my partner said to me last week, if Enron had had someone's name at the door, that disaster would never have happened - there would have been a "person" responsible for the company, not a myriad of investors with no direct influence on everyday operations.

We have been lucky enough to attract investors to keep us moving forward without having to give in to the terms placed by VCs. We've worked hard and long to build this company and we plan to stay with it for the long haul AND more importantly, to give our investors a return on their investment that will be unprecedented (even if there is no M&A).

I congratulate you for bringing up this subject and I encourage you to contiue with it. We plan to create a fund in the near future to help startups and the top requirement to qualify (other than a sound business idea and management team) is 1) there will be no IPO or M&A - you the founder will manage and keep your business - we will just help you become successful.

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Re: Do we need a new funding model for starting businesses?