Inside ROBRADY: An Interview With Matt Leiter
Q. Where do entrepreneurs find investors?
Depending on the type of investor whether it is a singular accredited investor acting alone, angel investor group or venture capital group, they can all be found in the usual venues that interested parties, who love innovation and technology, can interact with the creators of it. This can include but is not limited to:
• University technology hubs, such as the Office of Technology and Licensing at the universities of Florida or Miami.
• Venture capital association meetings such as the Gulf Coast Venture Forum and the Florida Venture Forum.
• Various local technology incubators.
• Angel groups typically have a system for fielding ideas and then hold scheduled meetings to review and qualify them.
• Accredited and singular angel investors can be found through wealth managers, accountants and attorneys who have a large rolodex of deal makers and investors.
Q. What do you do next when an investor says no or not now?
You thank them for their time, making you better and ask, “what would it take to make you a believer and then investor in my company?” Also ask them who in their network may have an interest in such an idea and company. Investors have different asset class preferences and their rejection of your investment is probably not personal. They may have a rule that high risk, high return investing is not in their long term wealth creation strategy. The key to this process is to talk to a lot of potential investors and realize that your conversion ratio will be close to 2% to 5%. So if you talk to 50 people an outstanding conversion ratio would be 3 investors.
Q. What is the most important activity an entrepreneur should do to succeed in raising capital?
Build a rock solid plan for execution and have very realistic assumptions in your plan. You never get a second chance to make a first impression and a well explained and realistic plan will help overcome doubts. Investors who can afford an investment of this type have likely learned through their own success how to separate blue sky and an achievable plan. Spend time creating an Executive Summary, a ten Page Power Point, and a five year financial forecast and carefully and honestly call out the strengths, opportunities , weaknesses and threats.
Q. Are there pitfalls to avoid in accepting an investment?
Use a securities attorney to draft your investment materials and don’t take just anyone’s capital. The capital you bring in should be from a savvy investors who understands the risks and can ride out the storm if things get bumpy. Most of all find investors who bring more to the table than capital. Find strategic investors who can take your company to the next level; make sure you have good rapport with them from the beginning. It is common for start-ups to fall apart over personality issues.
Q. What is your favorite part of the deal making process?
Seeing all the hard work of the team professionals come to reality and then finally sell or get a purchase and ship and deliver the product.
Q. Is there any particular aspect of a deal that appeal to accredited investors or angel investors?
As we have mentioned, accredited investors like certainty, although they will understand this is a higher risk opportunity. They want to see a credible management team. They know that a qualified management team is as important as a great idea.
Q. What is the difference between an angel investor and an accredited investor?
The best way to a make this distinction is by thinking of the accredited investor as a term to explain the investors net worth and standing vis a vis SEC regulation as it relates to financial strength. Accredited is a term defined by its meaning in SEC regulation. Those rules change from time to time so make sure you are up to date on the latest qualifications. The “Frank/Dodd” Bill came into effect last year and made this hurdle much higher. Angel groups are usually made up of accredited investors, but don’t have to be in all cases. The term “angel” is used to explain what role they play in the investing timing of a company. Angels are early stage and act as a life line to a company’s growth and typically command a larger stake in the company with more protections within their investment than later investors.