Keep your friends close and your investors closer

I had a nice chat with an investor recently (someone who I'd also consider a friend and advisor) and we got onto the topic of choosing which investors (and advisors) to work with. Today you have so many options to choose from when raising a round of funding such as family, friends, angels, VCs, micro VCs, super angels and super duper ultra awesome VCs (I may have made that last one up). But it's not about just getting money anymore, it's about surrounding yourself with people that can provide serious support to you and your business.

He talked about how back in the day you weren't able to spin up a new company over the course of a weekend. It took $10MM, a lot of Sun servers in a datacenter and a team of 20-30 people of which 3 would be dedicated to keeping your machines from melting or exploding. At this point when you needed to make a business decision you were surrounded by smart people who knew your world and would provide valuable input all along the way.

Today you can setup shop in under 24 hours and be serving thousands of users in a matter of weeks and maybe even 1MM in only 15 days like Kik. This is great news for people that want to build a company but it also means that you're probably only one or two people in a coworking space pumping out code, designing web pages and interacting with your community. When it comes time to make the big decisions you need help. This is where your investors come in.

See, here's the difference: A good investor wants to make money and hopes you succeed. A great investor needs to make money and will do anything to make sure you succeed. When it comes time to choose your investors and advisory board, always be sure that you surround yourself with people who are smart, dedicated and really believe in your team. These people will not only send you checks but they'll make introductions, go to bat for you and even pick you up when you're feeling down. In today's startup world this is a great way to give yourself a leg up on the competition.

Lessons Learned Everyday: Investing with your IRA

I learn something (usually multiple things) new everyday. Most days they revolve around tech, new startups, life and other useful subjects but yesterday I learned something very interesting from one of our investors. You can use your IRA (retirement savings) to invest in private equity and that means, someone's startup! That's some pretty cool news for both sides of the table.

That's a weird investment choice, no?For the investor: There are lots of ways to blow invest your money. Most people put their savings into stocks and bonds on the public market because it's simple to do. If you've got the right IRA you can invest in almost anything you want! Real estate, restaurants, films and even cemeteries (if you really want to) are all allowed by the IRS and you get the same benefits that you would from investing in the public market. There are some things that you can't invest in like artwork, jewelry and life insurance and limitations on who can own the company (no cheating the system) so make sure you check with your IRA's administrator and accountant before you do anything.

For the entrepreneur: This could blow the doors wide open for seeking family and friends investments. You can now talk to Grandma or Aunt Sue about using their retirement funds to help you get rich and become successful (and hopefully give them a return on their investment). Many times while people raise money for their startup they only focus on the normal investment types such as VCs, angel investors and very wealthy friends of the family. That's not the only place to beg ask for money.

There is one hitch along the way. Investors in your company still need to be accredited as defined under the Securities Act of 1933. This means that this option may not be available to everyone you know. And most important be sure to act responsibly as you raise funding and more importantly, as you build your business. Otherwise you may not get a birthday or Christmas gift next year.

You can find out more information about how all of this works at CNNMonday, Entrust New Direction IRA and by reaching out directly to your IRA administrator or financial planner.

How important is a great website while trying to raise capital?

Not sure how many of you readers out there are subscribed to the jasonnation.com email list (Jason Calacanis' mailing list which I highly recommend you get subscribed to) but his most recent post was entitled "How to raise an angel round" and it got me thinking (uh oh).  His email talked much more about how to interact while going into the round and dealing with angels than most other posts I've seen on the topic and most of it was very interesting.  One part in particular really struck me:

Product wins, so product speaks. Here are 10 things you can get right to impress angels.

...

3. Professional design: it's really simple to hire great designers from around the globe to put together professional presentations and mock ups. If your stuff is ugly, you are not trying hard enough--and that's a tell.

Jason was talking about needing a professionally designed website while courting angel investors.  I'm not quite sure A) I understand the thought process or B) I agree with it.  Let me explain.

What I don't understand about this thought...

I do get that having a professional design is both good for the brand and pleasant for people to look at, many times the design is the last piece of the puzzle.  Say you're making an awesome new VOIP service or a cool iPhone app and you've got most of it down pat but a logo and (maybe even a proper name) were not nearly as important as the underlying code.  You may be pitching an angel/group of angels to raise the money to push the product over the edge.  If having a professional design is that important to an investor, are they really getting the point of the product?

And now for why I disagree with it...

As I mentioned previously, it can be tough to get a design down long before you've raised money.  Sure you could use one of those services like 99designs (that he mentioned in his email) but is this a great way to spend your time/money?  I would think that most investors are looking for smarts, ideas and execution while looking to invest.  Sure you have the great idea and you may have executed but is it really smart to spend a small amount of cash on something that should surely be handled by someone that understands branding, design, SEO and so much more?  My thought would be that part of the first round of funding would push just these things forward by allowing the startup/entrepreneur to bring someone in who's truly talented at this.

I know from talking to enough friends who have raised money or have built a product that knowing where your skills start and where they end are two of the most important things to making a product or business successful.  When you need help coding, you should probably seek out a coder.  If you're looking for legal advice, don't go it alone.  And surely when you're looking to design your site, you probably shouldn't loose sleep over not knowing the proper CSS tags or whether or not your code is fully XHTML compliant.

Do you agree?  Do you believe that having a great looking website is that important to landing capital?  Does it depend on your product or is this sort of a blanket rule?

P.S. - I'm very interested in this topic as the project I've been working on rides a lot more on technology and mobile apps/sites than it does on pretty web pages.