Posts Tagged ‘Startups’
What Angel Investors Want to Hear vs What is Best for the Startup?
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…
Read MoreBad Advice – Non-publication Requests for Patents
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…
Read MoreBad Behavior By Angel Groups -“Due Diligence”
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…
Read MoreHow accelerators and angel groups lose their way.
Riding on the back of the entrepreneur. Ever drive by a construction site and see dozens of “supervisors” standing around, while one guy with a shovel is actually working? This is the perfect metaphor for the angel investment community, with the energetic, hard-working entrepreneur is deep down in the hole furiously shoveling, and everyone else…
Read MoreThe Endless Science Project
Serving two masters, and the enablement of investors. Some startups are the Endless Science Project. They start from a “cool” technological idea and work on endless science projects. They run one science project for a while, get tired of it, and move on to another one. Investors enable this to happen, and we, as investors,…
Read MoreTrading on the Differences
Uncertainty is not a Bad Thing, it is Opportunity. Every time you see a news story or read a blog about a topic you know very well, it is amazing that the stories have lots of factual problems. This is not a problem, it is opportunity. For many years, I have been offended by how…
Read MoreThe Government is the Worst Customer – and the Worst Investor
The Invisible Hand versus the Regulator’s Pen. We will always invest where Adam Smith’s “Invisible Hand” is pushing things forward, and avoid businesses where the regulator’s pen can wipe it out. We avoid regulatory risk, and so should early stage companies. Governments, by accident or design, distort the market in many ways. For example, the…
Read MoreRegistration Numbers
Due diligence in patents requires looking at the patent attorney. When I review patent applications, I always download the full prosecution history of the patent from the USPTO. The prosecution history is the formal, legal record of the back-and-forth between the applicant and the Patent Office, and includes all the papers as originally filed, as…
Read MoreThis product is great…for someone else.
The kiss of death. Entrepreneurs are constantly testing out their messaging. They are constantly pitching to their family and friends, and they are always prepared to pitch to investors. An entrepreneur’s pitch usually starts out with the problem in the marketplace, describes a ginormous total addressable market, then says how they are going to solve…
Read MoreAssignment Due Diligence: Unassigned Assets
Spotting bad behavior in startup companies. It is heartbreaking to see bad behavior by ‘inventors’ and their startup companies, but it occurs over and over again. Let this lesson be an example of the things you need to check anytime you are doing due diligence on an early stage company. First pass at due diligence…
Read More