Tip:
Highlight text to annotate it
X
Erik: What criteria did you use to evaluate potential investors?
Joe: That’s a great question and I think it’s something that I’ve been doing a
lot of thinking about recently. In the beginning, to be totally frank, in the beginning of the
seed round I was totally new to the game. I didn’t know any of the terminology. I
didn’t know how any of this *** worked, and I literally said, “If you have money
and I don’t totally hate you, let’s get this on!” [laughs] It’s kind of like when
you’re a fifteen/sixteen year old guy and you’re getting ready to finally enter man
hood, you’re like, “Anything will work at this point!” And as you get older you’re
like, “Well, I have very specific needs and very specific things that I look for.”
And I think that my attitude has changed a lot recently. So, in the early days I looked
for obviously people that were top tier investors that had wins that I could point to and say,
“Clearly these guys have helped entrepreneurs win in the game.” That was probably the
first thing that I looked for. And I also looked for people that I could get along with.
There are investors that you’ll sit down with and it’s clear, just like when you
go out with dinner with a girl for the first time. Within ten minutes you know whether
or not you’re going out on a second date, right? It’s the exact same thing with investors,
you walk in and you’re like, “Here’s my idea.” And they’re like, ”Eh.”
And you’re like, “Well, no second date!” [laughs] So, I think really finding – those
are the two things that I looked for. I looked investors that got the idea, got the value
of the proposition, were passionate about it and I looked for people that had funded
companies that won and funded really good companies that I respected. That’s changed
totally since – now, uh, I don’t like the whole super angel, seed kind of thing.
I think what I look for in investors now are people that use to be entrepreneurs, and invest
with their own money and normally don’t invest more than 200K. And that’s the first
round – after that – Because I really think you can build almost any product on
the face of the planet for 250K or less, and I think 250K is at the very high end these
days. So, in that reality, at most you need is five angels, right? So I think the big
thing that has changed for me is in my future companies I don’t think I would pitch a
seed round, I would pitch a couple of investors that were investing their own money. I think
there’s a very big difference in the dynamics between people that invest their own money
and people who don’t invest their own money. And I think there is a very big difference
in the insight and advice that you’re going to get in somebody who has worked in startups
verses people who have started startups.
Erik: And how has that – what you’ve learned from looking at investors at in the early
stages applied to how you’re making decisions reflecting on your Series A and looking forward
to your Series B?
Joe: Well, it’s really different, right? Because each stage of the company and each
stage of funding requires a different set of skills. So, now that we’re a twenty-something
person company and we’re turning around revenue and we’re starting to negotiating
big deals with big clients, we fundamentally need different insight and different money.
I don’t need at this stage in SimpleGeo, I don’t need the guy that was the first
angel investor in Instagram or the guy that founded something like that. I need the guy
that was a late stage investor in TeleAtlas. That knows how to grow a big business and
turn it into a billion dollar company. So, I think as you progress through those stages
of funding you need different investors with much different experience funding much different
companies.
Erik: So, you’re dating different types of chicks?
Joe: Indeed. [laughs]