Relocating to Angel Investor Hotbeds. Worth it?

dedellingerdedellinger Posts: 1subscriber
edited May 2008 in Startup Funding
We are thinking of moving from North Carolina to the Bay Area because there basically seems to be strong entrepreneurial buzz, a great talent pool and from what I have read and heard (even from one angel personally) angel investors like to invest locally (or at the very least regionally).
Some angel investor group won`t even talk to you if you are not already located in their area. We are at a point where we would really like angel investor level monies ($250K to $500K) to explode our growth and build the technological infrastructure and add key core staff.
We are not afraid of the move but would really like to have some feedback and stories from people who may have done similar preemptive moves without a real (or any) commitment from an investor and maybe some tips (aside from the obvious things like it is markedly more expensive to live out there).
Thanks in advance.
 
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Comments

  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    While it is true that many of the "professional" angels prefer to invest in "local"  businesses, I would recommend against relocating solely for the purpose of attracting angel capital.
    I don`t know where you presently reside, but for the amount you describe -there are probably quite a few possible investors in your backyard.
    While it may be more challenging, generally a good capital ready situation should be able to attract investors without relocating.
    Since a "personal" introduction is by far the best way to approach them, moving to a place where you have no connections could be more of a detriment..robertj2008-4-4 14:58:3
  • dedellingerdedellinger Posts: 1subscriber
    Thanks for the feedback, guys.
    There is quite a bit of money here (in the Raleigh Area and definitely Charlotte). My thinking was that it is spread about a lot of other areas of investment and that the Bay Area is sort of better primed but you both make good points.
    We haven`t really put out the full-court press locally, just pondering different strategies. Thanks. Looking forward to more thoughts.
  • hardknocksmbahardknocksmba Posts: 1subscriber
    Paul Graham is a very smart guy with a lot of experience with startups. He founded a company back in the dotcom days that allowed non-technical people to set up online stores; it got sold for a bunch of money to Yahoo and is now the basis for Yahoo stores. He now runs Y Combinator, a company that makes tiny investments in very cool startups, and helps them to network to the next levels of investment. Some very nifty companies have come out of Y Combinator.
    Y Combinator invests solely in Boston and the Bay Area. He`s very much of the opinion that tech startups need to be in one of those two areas, preferably the Bay Area. Here`s his article on it:
    http://paulgraham.com/startuphubs.html
    I ran a small startup company in the Bay Area once, and I`m not totally sold that Graham is right. I think it really depends on the kind of company you have. 
    I think Graham is right if you are talking about a company whose competitive advantage has to do with software or electrical engineering (and, to be fair to him, these are the kinds of companies he funds and is talking about.) There is deep expertise in the Bay Area in technology and financing, and if that`s what you need to get you to the next level, it`s a good place to be. There are also a wealth of service providers that can ease the path - rent-a-CFO companies, attorneys experienced at the VC dance, former startup CEOs that will coach and mentor out of kindness or for a fee, banks that understand start up needs, places that will sell you someone else`s used startup furniture, and so on. They understand the challenges start ups face, and have an infrastructure in place.
    For a lot of that, it helps if you have someone to introduce you so you can start networking. It`s not a closed community, in that it is more open to talent and creativity than maybe anywhere, ever, but it`s a busy community with no time to waste, and getting started with the people who can help you is easier said than done.
    There are downsides that can outweigh all the advantages if your company doesn`t need what the Bay Area offers. The cost of everything is very high there, which is a problem if you are trying to eke out your cash as long as possible. There are a ton of opportunities for everyone on your team, which makes hiring and retaining really good staff a challenge, unless you are really good at selling people on the vision.
  • hardknocksmbahardknocksmba Posts: 1subscriber
    One more thing about the startup hubs that I think can matter - the level of the game is pretty high there.
    Think of it like basketball. If you go to the local court for a pick up game in a place where no one else plays very well, they aren`t going to test you. If you go to a court where they really can play, either you step up your game or go home. It may be that improving your basketball game is not what you really care about - just breaking a good sweat and seeing some buddies - so you would rather be on the less competitive court.
    The start up hubs can be like the competitive basketball court. Even at the cocktail party / drinking at the bar level, if you show up and your game isn`t there, you will get the message by the time you finish describing what you do. If you are running a site that could have been done in 1998, you will get no respect.
    That can be good or bad. If what your site needs to succeed is Ajax / Ruby on Rails / Widgets / Mashups / Social Networking, the start up hubs will push you to be at 21st century levels. If what you need is a boring old LAMP technical platform populating template pages from a database,  and the business success turns on a whole lot of shoe leather sales and marketing, the start up hubs will just increase your costs of doing business and give your technical staff a case of software envy.
  • ConsultnowConsultnow Posts: 1subscriber
    In regards to a hot bed of investments, it is true that NC isn`t Silicon Valley, but there are more than a few Angel and Investing networks in the Charlotte and R-D areas that are more than capable of providing funding.  In addition there are strong networks in Virginia, GA, and TN that can also be of assistance if you are willing to drive for meetings. 
     
    The problem may be that the 250k-1M investment area is possibly one of the hardest to penetrate because they require Private Placements that will need to bring in more than one investor.  The guy who writes the blog at www.developmentstyles.com is really knowledgeable about this arena.  In addition he has contacts with the Gathering of Angels which is a national network with hubs throughout the country.  You may want to reach out and see if he can be of any assistance.
  • dedellingerdedellinger Posts: 1subscriber
    Thanks for these different perspectives. It has definitely provided me with some things to think about.
  • DougsterDougster Posts: 4subscriber
    Interesting Info.
     
    Does anyone know of any Sporting Goods/Games Investors/Partners?
  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    Dougster,
    There are a number of capital sources for sporting goods and/or games.
    What level of investment are you seeking?
  • DougsterDougster Posts: 4subscriber
    Hello Robert,
    Thank you for the reply.
    I can get my startup off the ground with as little as $25,000.
  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    Dougster,
    That amount of capital pretty much eliminates the "professional" investor categories such as Venture firms and angel groups.
    Do you expect additional capital requirements in the future?
    What "skill set" would you want in a partner?
     
     
  • DougsterDougster Posts: 4subscriber
    Hello Robert,
    Yes this won`t take much to get started & I would expect it to be profitable well within 1 year.
    I am more interested in a Investor/ Partner vs funding.
    As far as what I am looking for in a potential partner:
    Someone with talents in Web design, Sporting Events, Contacts within the Sporting Goods Industry someone with those or related talents would work well..
     
    I fully expect this to be a made for TV Sport product and that is where my talents revolve.
    I hosted & produced my own live TV show, Sales, Marketing, DVD Video prodiction & I also have Experience in the Fitness Industry.
     
    (I also have a great Concept for a Million $$$ Fitness Video) 
     
  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    Dougster,
    Joining forces with a partner with  "complimentary" skills can be a big boost to the business and an asset in future capital rounds.
    Any particular reason you prefer an equity approach over some form debt funding method?
  • DougsterDougster Posts: 4subscriber
    I think it would be a great way to build something up.
     
    I have the product & the plan, I just lack some experience in some business area`s and feel that this would be a ideal situation for a Investor/Partner to be able to join something & help it grow as well.
    I see this as becoming VERY BIG!
     
    I would consider perhaps licensing but I want to retain as much control as possible.
  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    Dougster,
    I`m getting some mixed messages from your last post when you talk about getting an investor, taking on a partner - then say you want to retain control. 
  • DougsterDougster Posts: 4subscriber
    Is that mixed?
    Would you give up control taking on a Partner/Investor by just a mere $25,000?
     
    Obviously a Partner would have a say in matters but I would retain the final say on the control of the company.
     
    I don`t see that as giving mixed messages. But then I am perhaps not as experienced as you?
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