As David and I prepare to launch Velograf Tools, I scrolled through my postings from 2010 when we were thinking about raising money for a graph analytics service (a recommender engine of some type, I believe). While some of my excessively verbose pontifications might be considered relevant, three years has seen a ton of changes in software development and fundraising. Crowdfunding via Angel List or Kickstarter completely changes the model for raising money from angels and validating the market by raising money at the same time. The most significant impact is the dramatic compression of the fundraising cycle.
As Velograf prepares for fundraising on Angel List, I see the extended process of one-by-one introductions to prospective investors (angel or VC firms), emailing executive summaries, scheduling meetings to walk through pitch decks and the never-ending follow-up activity rapidly morphing into a short cycle. All the serious prep work still needs to be done since the story must be good—product, team and opportunity—but the time to a decision will be fast. Anybody pitching a deal using Angel List is going to know in a few weeks whether their deal has legs.
As someone who has pitched deals to VCs and been stuck in the middle stack (neither a solid ‘yes’ nor a definitive ‘no’) for weeks and months, the prospect of a quick answer seems ideal. Even better, the validation (or failure to validate) the results from testing your idea against a pool of hundred or even thousands of prospective investors is invaluable. In pre-crowdfunding days, often unwarranted optimism (a necessary virtue/vice of entrepreneurs) kept early-stage startups pitching long after it was clear they were not going to get funded.
So, as we get ready to launch Velograf’s tools for online community managers and kick off a seed fundraising campaign, I find the prospect of using Angel List almost pleasant compared to the dread I usually experienced starting a fundraising effort. I may have a different response in December but right now I’m optimistic.