Building a company that can be sold is building a different product for a different customer. Serving two masters – but they are compatible. The first master is the customer who buys your product, and the second master is the one who buys your company. Most entrepreneurs lose sight of the fact that the acquiring…

Nobody cares about your technology. Entrepreneurs love to talk about their technology. Endlessly. Ad nauseam. And when it’s time to raise money or sell the company, they make the same mistake: they lead with the tech. But here’s the truth: nobody buys technology. Not your customer. Not your acquirer. Not your investor. They buy a…

If you can’t explain why someone will pay 10x to buy your company, you’re not ready to raise a dime. When you’re raising outside capital — especially from angels or venture funds — you’re not just pitching your company. You’re implicitly making a promise: that their investment will turn into a significant return, typically a…

How “licensing-only” businesses can get caught in the angel/venture minefield. Let’s walk through the math that every angel investor does. This company is raising money at a 15 million dollar post-money valuation. For us as early-stage investors to justify that investment, we expect a 10x return. That means this company needs to exit at 150…

I recently heard a pitch from a startup with remarkable technology – a genetically modified seed that signaled when it’s under stress. Instead of waiting for crops to wilt, farmers could respond early, boosting yields. The data was strong. The science worked. But despite all that, I walked away unconvinced that the company was investable.…

We looked at a company who had been more or less steady-state for several years but wanted an infusion of cash. They were operating in two smaller markets without fully capturing either of the two smaller, midwest cities, but were coming to investors asking for additional funds. The business was a local service company, where…

How incompetent patent attorneys hide their work product from public view. Occasionally, I run into patents where the patent attorney talks the client into a non-publication request. This is always a bad thing. Non-publication requests keep your patent secret until the patent has been examined. The patent is confidential throughout the examination process, and only…

Due diligence is supposed to help investors and the entrepreneurs, but many times it is a charade. I am a member of several angel investor groups, and I am intimately familiar with many more. In general, angel investor groups can be a positive force for good: they teach entrepreneurs and angels how the investing system…

Last time, we discussed the provisional patent application hoax perpetuated by patent attorneys. In this post, we look at the scam from the inventor/entrepreneur side. Many so-called inventors/entrepreneurs like to file their own provisional patent applications, then shop these to gullible angel investors, hoping that the angel investors will bite. The “inventor” is hoping that…

One of the greatest hoaxes in our industry is the notion that provisional patent applications are a good thing. They are not. I am always amazed how some hoaxes are told over and over to the point where people actually believe them. When they find out that the hoax was not true, their confidence is…