Updates from August, 2018 Toggle Comment Threads | Keyboard Shortcuts

  • Leon Apel 4:37 pm on August 15, 2018 Permalink | Reply  

    Testing Prospective Founders 

    The following are same ways you can test for the credibility of potential founders:

    1. Real Positions: If a founder puts positions on their deck like COO, CEO, CTO make sure that the founder explains exactly what each person will be directly responsible for. I’ve seen multiple situations where a founder lists people on their deck who do virtually nothing. It comes off as dishonest, especially when you cross-reference their position with their LinkedIn position.
    2. Skin in the Game: What is the exact dollar amount the founders invested? If they have liquid assets why aren’t they putting a significant percentage of their funds in a company?
    3. Personal Guarantee: While this might be a controversial ask, it helps to understand their level of confidence. In some cases, such as for hard money loans, this should be a requirement.
    4. Jurisdiction: It adds significant credibility to be based in the US and have significant US assets.
    5. Ability to Explain a Strategy Specifically and Clearly: If the founder can’t explain their strategy in detail, they may not understand the problem or have the skillset to solve it.  In eCommerce there are a few buzzwords that people consistently use that tip me off that they don’t understand how to grow their company.
    6. Peer-Review from Several Sources/Experts: Get help compiling questions/due diligence from others/experts to get a better understanding of the risk/reward of the company.
    7. Addictions: Does the founder have any alcoholic, gambling, or drug-abuse issues?
    8. Realism: If a time frame for milestones or the amount of funds asked for are unrealistic, it shows potential issues with the founder’s judgement.
    9. Funding Vehicle: For example, an ICO from a BVI company may have a worse reputation than a SAFE agreement or a public company, which does quarterly disclosures.
    10. Professional Communication: If the founder can write professional updates, it helps add credibility.
    11. Social Media Presence: You may question the founder’s judgement if they post inappropriate content on social media.
    12. Ability to Cope with Stress: Ask the founder about the most difficult business challenges they encountered and how they solved them.
    13. Excuses: I’d rather hear about how someone plans to grow and solve an issue than someone who spends too much time explaining their setbacks (this is just a personal preference). “Dont criticize, condemn or complain” – Dale Carnegie.
    14. Focus on pro-forma vs actual performance numbers: I want to see both. However, if pro-forma is listed I want the strategy to be explained clearly so that the pro-forma is not complete nonsense.
    15. Time Management: The “I’m too busy” excuse isn’t impressive or make you seem to be in demand. If you’re good at managing time, you can focus on the important things.
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  • Leon Apel 4:20 pm on July 31, 2018 Permalink | Reply  

    Why I Don’t Sign NDAs an Investor: 

    Why I Don’t Sign NDAs an Investor:
    You can read someone else’s reasons here, which are more eloquently explained than mine: https://medium.com/@suranga/why-you-shouldn-t-care-about-ndas-and-why-we-don-t-sign-them-2ba3edcaa86e
    The following are my reasons:
    a) We look at many deals and don’t want to invest in conflict of interest checks or be limited
    b) I think I’m a good guy. Look up the type of companies I’ve funded (mostly mission oriented)
    c) They’re not super enforceable
    Since I’ve been asked a few times now, I thought I’d post this here.
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  • Leon Apel 7:25 pm on May 17, 2018 Permalink | Reply  

    Brainstorm of Businesses Needed 

    Quick Brainstorm of Businesses Needed:

    1. Healthcare marketplace connecting longevity service providers with patients
    2. Private security services: There needs to be a private alternative to 911 in major cities that sends private armed security to your home or business in the event of a security threat (eg. trespassing, violence, theft). It seems like public sources are not always reliable (eg. Time is wasting giving the location and sometimes local 911 operators are not available). A simple voice command from any app automatically sends your location and profile.
    3. Private health services: Similar to the above, there needs to be a private health emergency response unit that provides emergency health services on demand.
    4. Food services delivery company where you can watch your food being made and delivered on-demand through a video streaming app to ensure the entire process is handled with care. The food preparation team and delivery drivers (eventually drones) will wear body cams.
    5. AI tools that detect crime in public and private environments
    6. On demand dating service that interviews singles in a geographic area or theme (eg. College students) and sets up guaranteed dates

    If you’d like to help me build any of the above, please reach out to me.

    Philanthropic Ideas Needed:

    1. Website that uses secret video footage to expose waste, fraud, corruption and scams (eg. Scammers targetting tourists in foreign countries) and abuse and posting the videos online
    2. Service that protects victims of crime

    The philanthropic ideas may not be great businesses and may be more suitable for crowdfunding or a community of individuals that makes advertising revenue.

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  • Leon Apel 4:23 pm on September 1, 2017 Permalink | Reply  

    #1 Problem with External Investments: Liquidity 

    1 Problem with External Investments: Liquidity

    My top issue with angel investing platforms is that virtually every company raising capital doesn’t provide a specific way in which your investment will be paid in the event the company doesn’t sell itself. Many investors don’t like to talk about this but I think it’s important for prospective investors to acknowledge this significant risk.

    The company can easily decide to never issue dividends and just keep floating around, even if they do millions in monthly sales.

    If you invest in a private company and there are not clear terms regarding how liquidity is repaid in cash, you’re taking excessive risk. It’s important to create some sort of condition for repayment in a reasonable time period.

    The goal is to create a mutually beneficial deal that both supports the entrepreneur’s goals while not exposing the investor to excessive risk.

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  • Leon Apel 2:28 am on July 18, 2016 Permalink | Reply  

    What Do Investors Want to Know? 

    The following are some things that would be useful to outline in a presentation to a prospective investor:

    Strategy

    1. Explain the problem and how it will be solved
      1. Expert opinion, peer review, explaining the validity of your business
      2. Proof/demonstrations
    2. Explain the timing to have your minimum viable product/service available
    3. What are the company’s top paths to profitability, ranked in order?
    4. Top priorities must be outlined
    5. Growth plan

    Use of Funds

    1. Outline the timing and the amounts (in ranges)
    2. It’s preferred that an equity holder’s compensation should be delayed until breakeven/profitable event takes place
    3. Incentives need to be tied to performance

    Financials:

    1. Existing income statement and balance sheet if applicable
    2. Budget forecast

    Timeline

    • Traction/progress to date?
    • Milestone based funding: Capital is released as milestones are met/proven
      • For example, third party verification of a a test/study

    Management Team

    1. Explanation: why your team is the best fit for this project
      1. Strong references may help
    2. Full time focus
    3. History of both success and failures
    4. Incentives are aligned
    5. Skin in the game (Key managers have contributed their own capital and will delay compensation until the company is profitable)
    6. Compensation for founding members aren’t made until a “proof of concept” or “minimum viable product” is achieved
    7. Negligible conflicts of interests with disclosure
    8. Able to pivot/adjust/not stubborn
    9. Honest
    10. Healthy

     

    Investment Vehicle

    1. Based in the US, UK, or CA ideally (ideally, the founder will be based out of one of these countries). These countries tend to have reasonable banking and legal systems
    2. Legal: JAMS arbitration in LA county, California with the prevailing party entitled to costs

    Reporting

    • At least quarterly reports (sufficient) by email

    Risks:

    1. Please explain your track record: Why/how have your past projects succeeded/not succeeded?
    2. Please analyze:
      1. Strengths
      2. Weaknesses (eg. Knowledge, Capital, Human resources)
      3. Opportunities (ie. What markets can be entered?)
      4. Threats (eg. Competitors/Substitutes)
    1. Regulatory/compliance issues?

    Offering

    • $X Cash in exchange for Y equity
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