Talking to Strangers is Good

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Jul11

Talking to Strangers is Good

Jeff Jordan

Know More: Raising Money from Angels, Tips for Entrepreneurs 2.0, Tips for Entrepreneurs

Lately, I've spoken to a ton of entrepreneurs who don't want to talk to angel investors about their ideas for one of two reasons:

1) They don't know if their idea is ready
2) They want the angel to sign an NDA before they talk

Both of these concerns are understandable and very common, but neither is a good reason not to start talking to angels.

Idea is not ready -- It's never really too early to get angels involved in your project. Start taking them out to lunch as soon as you can. Ask them for feedback and then apply it. Show them that you are sharp enough to seek out good advice from smart people, and tough enough to execute. The more involved an angel is in the development and birth of your business, the more likely he/she is to get financially involved later on.

NDA = Prenumptial on the first date -- Asking an angel investor to sign an NDA before you speak with him/her is like bringing up a prenumtial agreement on a first date: Way too much commitment way too early. An NDA is a liability that most angel investors are not willing to take on until much later in the due diligence process, if at all. Entrepreneurs, please heed my warning -- asking for an NDA before the first pitch is suicide 99% of the time. It gives investors the impression that you are either stupid or naive -- or both. Neither quality is likely to encourage an investor to take the plunge with your company.

related entries

First-mover Articles Jul 31, 2006
Valuations Explained Jul 17, 2006
EnablingAngels "On Leave" Nov 7, 2006
Valuation Panic, Part 2 -- For Angels Aug 31, 2006
Valuation Panic, Part 1 -- For Entrepreneurs Aug 31, 2006

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