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Value: John Warrillow

Inside tips from an angel investor Add to ...

If you have ever watched Dragon’s Den, you know the depths that would-be entrepreneurs will go to get money to fund their businesses.

Finding an angel can be a rough sport. Oftentimes, entrepreneurs are relegated to spending thousands of dollars for the opportunity to present their business at a conference designed to connect startups with investors looking for the next Google. Attracting money to fund your concept at these events is a long shot.

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Jason Calacanis is out to shift the balance of power back into the hands of the entrepreneur with a new event called the Launch Conference, designed to connect new businesses with angel investors.

Instead of asking entrepreneurs to pay to present their idea, with the event organizer pocketing the profits, entrepreneurs pay a nominal conference fee and Mr. Calacanis personally invests the money he makes from the event back into in the companies that the judges deem most promising.

I chatted with Mr. Calacanis – whose angel investments include Gowalla, Blippy, ChallengePost, GDGT and Thumbtack – to get his advice for entrepreneurs looking for an angel.

Mr. Warrillow: What advice would you give an entrepreneur raising money for the first time?

Mr. Calacanis: Build a stunningly beautiful, well-designed product in a growing market.

Mr. Warrillow: Can you tell me a story about an entrepreneur who made a mistake in seeking an angel investor?

Mr. Calacanis: I've had many entrepreneurs reach out to me with products that have horrible names, disgusting logos and horrible UX (user experience) design. These same entrepreneurs have called me from cafés over Skype on an open microphone.

If you can't make a decent logo, buy a great domain name and have the savvy to call on a land line in a quiet room, you are probably not going to change the world with your ideas.

Details of how you present yourself and your ideas matter, not just to angel investors but to your future users and customers.

Mr. Warrillow: What does the typical angel investor need to see in a business (or plan) before investing?

Mr. Calacanis: Angels don't invest in business plans in my experience – I certainly don't. I invest in people who can make great products as opposed to talk about making great products. I'm looking for passion, knowledge, skills and, most of all, execution.

The reason I've done well at raising money and selling companies is because of execution – not talk. Engadget, Autoblog, Joystiq, Silicon Alley Reporter, TechCrunch50, Mahalo, Open Angel Forum and ThisWeekIn.com are all well-designed products with great logos, UX, domain names, design and business models.

Forget about building a model. Spend your time building a stunning demo.

Mr. Warrillow: What does Jason Calacanis look for? What company do you think will be the Groupon of 2011?

Mr. Calacanis: Right now, I like things in the social, mobile, commerce and content space. So, Gowalla, Blippy, ChallengePost, GDGT and Thumbtack are all in that zone. However, more importantly, they are run by skilled executives who make beautiful, well-designed products.

Mr. Warrillow: How does an entrepreneur know whether to look for venture capital money or an angel investment?

Mr. Calacanis: It actually doesn't matter which route you take, as long as you're in love with the person giving you the money, because you've got to spend a lot of time with them. Check their references and past investments, and ensure you respect their opinion.

Money is essentially free for anyone who is even 50-per-cent qualified to build a product right now. As such, you need to pick your investors – not have them pick you!

The Launch Conference will take place in San Francisco on Feb. 23 and Feb. 24, 2011.

Special to The Globe and Mail

John Warrillow is a writer, speaker and angel investor in a number of start-up companies. He writes a blog about building a valuable – sellable – company.

Follow on Twitter: @JohnWarrillow

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