Yet Another Broken Business Model

Gotta love business and corporate finance. Something’s always broken or needs to be reinvented. So, I have an idea for one. Just last night we had a spirited discussion on angel financing. We talked about all those “matching” web sites and “business plan positing” web sites, formal angel groups and presenting to a caputed audience for $3,000?? Gez, if a start up had $3,000 they would be fools to spend that shot-gunning their intellectual property at one of those old-school forums. You can almost launch a web business on $3,000 these days.

So, as we took on the world’s problems one at a time, we did spend some extra time lambasting the angel financing process as we currently view it. Since we all have experience starting companies and raising seed (angel) capital, there was some basis to our ranting…and raving.

I could post a very long message, add charts and graphs, but suffice to say that it is my opinion that many “formal” angel groups should just x%$*&@ retire. The new model should leverage technology and particularly digital media. Like a YouTube for angel investing. Maybe AngelTube – Finance yourself!

Really, there is a model to explore here that could actually work. And, no wine or food is required! If you have ever been a presenter at one of these angel rituals, you know what I mean.

Here is what I am thinking. Combine the best attributes of a fundless sponsor with YouTube-type technology, the speed of Google’s search, the urgency of a ripe pear, the review process of Amazon.com and this model could speed badly needed capital (did I say badly needed capital?) to professionally screened and evaluated yet promising start up companies nationwide.

One event I attended with a client was just miserable. I asked an “angel” in the group of 30 or so middle-aged businessmen and women about their funding process and timing. Their process for evaluating investments was really, really interesting…and creative too! Worse, was their timing for a close. This fellow said their last deal took 120 days to close. OMG! 120 days is a lifetime to a start up trying to pay their phone bill that is 45 days late. Now, a Series A financing should take 90-120 days…not a $250,000 seed round. This is what I call “failure to communicate” and a broken, out-dated model for speeding badly needed capital to promising young companies. I may just do something about this.