Inventing for the Rest of Us » venture capitalists

An Investor's Stimulus Plan

Bryan Daigle — Fri, 13 Feb 2009 16:47:57 +0000

Unless you’ve been living under a rock, you’ve heard the term “economic stimulus plan.” Mark Cuban, one of the original “dot.com billionaires,” has introduced his own version of an economic stimulus plan.

In his blog earlier this week, Cuban announced a concept he called “open source funding.” The idea, aside from investment stimulus for businesses, is the sharing of lean and profitable business plans. The only way one can hope to qualify for investment is to meet all of Mr. Cuban’s criteria, including posting your business plan publicly for review.

Of course, there are some dissenters who complain about the criteria but hey, when you’re giving away money, you have to make some rules. There’s also the general ruckus about stealing ideas but that’s also part of the reason for the public posting – “sharing” ideas. If someone else has the means to start a business using your idea, that’s another new business start-up. The idea is to get more Americans into business.

However, a by-product of this open air discussion and sharing of ideas on the internet is the dozens of other potential investors jumping into the arena, posting on the blog, offering additional backing, and taking notice of the flow of ideas. Whether it’s for the chance to do business with the Dallas Maverick’s owner, or the for a share of the spotlight, the end result is that the gauntlet has been thrown for these big money moguls to re-invest in American know-how.

It’s time to check your patents and dust off your spreadsheet.

Street-Smart Tactics to Get the Financing You Need

Bryan Daigle — Thu, 09 Oct 2008 12:32:56 +0000

The most important thing to make your business venture successful is $$. To get financing, you need to impress investors, and trust me, that is not an easy task. So before you venture into the investor market and pitch your business, here are some tips to help your prospects:

Smart Stalking: Just finding investors can be tough. They hide because otherwise they’d have everyone asking them for money all the time. The best way is to get a personal introduction from someone that knows the investor. That’s where networking comes in handy. You can also use resources such as LinkedIn to find potential investors. Also, many people that call themselves “investors” actually don’t have experience investing in companies, so be sure they have done investing before.

Speak Their Language: When you are presenting your business ideas in front of the investors, be very careful regarding the language you use. There are industry-specific terms which might not be understood by everyone; so speak in simple, plain language to avoid misunderstandings.

Remember That It is Their Money: One investor pointed out that the key for an entrepreneur seeking funding is to figure out how to convince an investor to pull out his or her wallet and why they should invest. Put yourself in their shoes. Why would you invest in your business?

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

Selling My Company 2.0

Bryan Daigle — Tue, 23 Sep 2008 17:50:02 +0000

After weeks of negotiation hoopla, legal paperwork, and minutae, I can finally get something off my chest. My first company (and one true love), IdeaTango, was recently bought by another industry player, InventBay.com. Here is today’s press release.

I’m taking a cue from Norm Brodsky, who wrote about his highly publicized acquisition in Inc Magazine while it was still taking place (and falling through and then taking place again). Because of its public nature, I can’t get too much into the details, but I’d still like to share my experience with some of you who might find yourself in the same position one day.

After two years of not knowing what would happen the day-after-tomorrow, it’s finally good to know that my partners and I have had a successful exit. That doesn’t mean that we won’t continue to work for the acquiring company, we will, it just means that our few years of doubt and hard work, have had their first payoff. The second payoff will be in working with InventBay (a publicly traded pink sheet company) to maximizing their value to shareholders and owners.

It’s funny though, because there were definitely days that I didn’t know how much longer IdeaTango would be around. Usually it had to do with cash. Sometimes I had to reach into my own pockets. Later, I had to ask for help from my inner circle of friends and family. As you can see my earlier posts, we even thought about approaching professional investors.

We made the decision to sell the company for three reasons. First, we realized we needed more resources ($$) to take IdeaTango to its full potential. Second, we realized that we were running low on both the time and energy needed to pitch, get rejected by, and then acquire some investors. The time horizon for selling a company like ours would save 75% of the time. Third, my partners and I sacrificed for two years (no salary, no benefits) and needed a shot in financial arm to rejuvenate us.

It was not an easy decision to make, and of course I would have liked IdeaTango be sustained and grow using its own internal cash flow. But with a model like ours, which requires a long time horizon, that just wasn’t possible. Perhaps that’s a lesson learned for my next startup.

Overall though, my partners and investors were happy with the deal. Myself, Pablo, and maybe even Lisa will continue in some capacity with the acquiring company.

Feel free to ask me questions about how my experience might apply to your situation.

- Bryan Daigle

Where is your attention? On Business Plan Competitions?

Bryan Daigle — Sun, 13 Jan 2008 21:18:04 +0000

Right now, my attention is being diverted. I can’t even tell, most of the time, people have to tell me.

As an entrepreneur, inventor, and just an idea-guy in general, I get distracted easily. In fact, although I’m not a huge fan of Donald Trump (did I mention I don’t like cockiness), I listened to some of his audio courses. Most of it was crap, but there was one thing I was happy to hear. He said as an entrepreneur you almost have to be ADD. Because you need to be able to jump from task to task, employee to contractor, finances to marketing, you NEED a short attention span.

I was happy to hear that at least Trump thinks my self-prescribed ADD is a good trait. Then again, you need to control it. Here is an example of something that one of my investors told me, rightly so, was distracting me from the real pot of gold.

When I presented to the University of Texas MBA Entrepreneur Club back in April of 2007, one of them asked me if I had tried business competition plans to raise money. In fact, I had just read about a Princeton drop-out that was using business plan competitions to raise money for his organic, worm-created fertilizer. Even at this point, I thought these competitions were only for students, so I answered the questions “no” and didn’t think about it any more.

A few months later I met an undergrad student from Southern Methodist University here in Dallas. We spoke on several occasions and he told me we should enter IdeaTango to the SMU MBA business plan competition. As it turns out, although he wasn’t an MBA student, he was allowed to participate. He said even non-students were allowed to participate, they just needed to get an MBA student on the presentation team to meet the requirements. This was the first time it dawned on me that maybe these competitions were a good way to raise money, even for non-students.

So we (me and an MBA student) signed up for the competition, which I thought would be good practice for raising money, and maybe we’ll even get a few thousand bucks if we win. Maybe we’ll even get some local press. Not a bad idea right?

When you have a business to run, you have to run advertising, sales, trade shows, employees, website development, raising other money, accounting, IP, etc. Was entering this contest in the best interest of our business?

Pros – we could win $5000-$10,000, had pretty good odds since only a few teams were selected to enter, good practice for raising money, GREAT publicity
Cons – does not help sales, which is the #1 focus before going to investors, takes time, detracts from other business activities, limits directions the business can go

Whatever will we do? Compete in the contest, or focus on driving business?

Bryan Daigle

Entrepreneurs Like to Zig and Zag

Bryan Daigle — Mon, 07 Jan 2008 19:54:39 +0000

Straight lines are for rank and file types. The true mark of an entrepreneur is that he can zig when he needs to, or zag when the time comes. Without getting into specifics, ideatango may be taking a zag soon. So what does that mean. We’ll you’ll just have to wait.

What am I doing about it? Or more importantly, if someone comes to you with a business proposition, what should you do about it?

This particular deal would be an alternate form of financing for ideatango. Rather than the traditional private equity or angel funding we’ve been thinking about. This method of raising money was new to me. So first things first, I needed to get comfortable enough with the financing arrangement so that I could explain it to my partners and existing investors. As it turned out, the more I learned, the more questions I had, which were eventually answered.

I think it’s also helpful to figure out why the other side needs you. Think about it from their shoes? Why you? Why now? Although most people are good people, there are a few shady types. So you better get a good answer to these questions otherwise they might be in it for themselves, and only themselves.

Conduct your due diligence, check out the stories, do background checks, whatever you need. I have heard the recommendation that you should only do business with people you know well. Not only for the trust issue, but also because you know how they work, and if you won’t pull your hair out when you decide to work with them.

Getting to know the goals of each of the parties involved is a good idea. That way you can come up with an appropriate exit strategy and know what to expect. Some people may want to make this a lifestyle business, while others are only in it for the short run.

Probably the best thing to do is ask as many questions as possible. You’ll not only good a good feel for who your potential future business partners are, but it will lead to more questions, which will make you all the more knowledgeable going into this transaction.

To all the ziggers out there, keep zagging.

Bryan Daigle

5 Common Misconceptions about Inventing

Bryan Daigle — Thu, 06 Dec 2007 05:10:59 +0000

WARNING: THIS POST GIVES A HEAVY DOSE OF REALITY! PROCEED WITH CAUTION.
Being a business owner in the invention industry, and an inventor myself, I felt I needed to voice – eh hem – vent, some fallacies that are prevalent in the industry. Here is a short list of common misconceptions of people, businesses, and general issues in the invention industry:

Fallacy: People and Businesses are out to “steal” your idea. The truth is, it takes a lot more than an idea to have a successful product. Talk to any successful inventor and they’ll tell you the idea was just the start. Business savvy, determination, marketability, money, management team, and execution – that’s how you make your great idea successful. In fact, don’t take my word for it, listen to Paul Graham (a very very successful tech entrepreneur).*Note: This advice is for the US. China, Vietnam, etc. will copy your product no matter what.
Fallacy: All companies in this industry are scams. In fact, out of the hundreds of thousands of patent attorneys, product developers, and marketing firms, only a few dozen companies and individuals are suspected scams (as counted on inventnet.com’s list of suspected scams). The reason we often hear of the “scams” is because they’re the ones advertising on TV & radio, and the ones with the biggest wallets. So 99.9% of service providers and individuals in this industry are ethical human beings. So how do you distinguish the handful of bad apples from the good ones? The quality of their work and their references. Ask for samples and check InventorEd for the latest news on scams.
Fallacy: I can invent successfully without spending much money. Inventors and small business owners around the world wish this were true. Unfortunately, it’s going to cost money, most likely your money. Most inventors and entrepreneurs finance their invention on piles of credit card debt (85% according to Entrepreneur Mag). The trick of inventing is to know where it’s smart to spend money, and where it’s NOT smart to spend money. You need to think of inventing more like a business. Of course, you can always get creative and cut your costs, but at a minimum it’s going to cost tens of thousands of dollars to get your invention to a point where retailers want to even talk to you.
Fallacy: Wal-Mart will buy my idea and Venture Capitalists will invest in my idea. Wal-Mart doesn’t buy ideas, they buy already manufactured products that have a proven track records of sales. Very few Venture Capitalists invest in inventions, because the success rate is so low, and admit it, we inventors can be difficult to deal with. Be prepared to spend your money and get family & friend investors instead of VCs. Don’t worry, as mentioned before your in the same boat with 85% of entrepreneurs.
Fallacy: If I get a patent, my invention will make millions. Not to be the bearer of bad news (again) but according to an MIT study 97% of patents never become commercially viable. Too often inventors focus too much on the patentability and not enough of the marketability of their invention. Not to undermine patents, they are good, but they shouldn’t the only thing on your mind.

So I gave you the straight juice tonight. I don’t mean to discourage anyone from inventing or starting a business, but point out some hard facts that you will be up against. That’s where the persistence & determination comes in handy.

Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas
For more good info & advice, check out the official IdeaTango Blog.

IdeaTango Earns Award at Rice Alliance Web 2.0 Investor Forum

Bryan Daigle — Fri, 09 Nov 2007 07:28:03 +0000

Well, the title says it all. Today we walked away with the top honor given at the Rice Alliance Information Technology & Web 2.0 Investor Forum. Essentially the investor audience voted us one of the “Most Promising” companies.

Our award is largely in part to Lisa Lloyd, who gave a fantastic elevator pitch to a crowd of 300 at Rice University, in Houston, TX.

Not to put all the spotlight on ourselves, several other innovative companies also walked away with the award. Notable standouts were opmom.com, a social networking website that connects and organizes Moms. Another good presenter was podcastready.com, a service that simplifies creating, listening, and subscribing to podcasts. Typically Apple has dominated this space, but podcastready is hoping to simplify the podcast process even further.

The headline speaker was Jeff Henley, Chairman of Oracle. Here are some notes from the talk (we’ll have an audio link up here tomorrow).

Worked with successful entrepreneurs i.e. Larry Ellison
Oracle has $5B cash flow
Larry didn’t want to dilute, wanted control
Software can do it with little capital.

Steps for successful startup
-Need a good idea
-Need smart people, don’t forget to look overseas
-Work hard & fast

Google monetized existing technology
Bill Gates bought IP
Larry Ellison borrowed (legally) ideas
Oracle wants niches or way to scale up
No VC Oracle fund anymore

Here are some other semi-legible notes from speakers, presenters, and the Venture Capitalist feedback panel. We’ll have audio files & photos posted here in a few days.

New Venture Presentations worth noting:
Tritaur, creators of Opmom.com
Social networking site that help moms interact, communicate, & organize their day. Helps brands get word of mouth awareness. The rest of the info can be pulled from the program.

PodcastReady – great speaker, already have VC money
Player that integrates & makes podcasting easier.

Whiteboard Labs
Created MotionNotes, kind of widget that allows user to attach a personal message to a video or widget. Say you have a youtube video of you doing something stupid. You could preface the video with a motion note that says “don’t try this at home” or “I was drunk”.

VC Feedback panel to New Venture Presentations – see program for panel members
OpMom
How get users? – Oprah, book club
Get online advertising guru
Get 75-100k users before going to VC
Need to figure out how generate big audience with little $.
Risk types – market risk, technology risk, execution risk. Mitigate those.

PodcastReady
How get user adoption?
Go for mass consumers or enterprise users?

Whiteboard
Focus on consumers or enterprise?
What’s the product roadmap for future products
How to integrate into ecosystems – facebook, shutterfly, flikr
Use focus groups for user interface improvement, huge issue since going up against apple

Cool elevator pitch companiest:
IdeaTango OF COURSE!!
Fluid innovation – site that helps big companies license their patents
m@keido – sync your cell phone data
openteams – my buddy Tory Gattis, wiki-like software to make big companies more entrepreneurial
Qtags – keyword-based text messaging programs
Sk*rt – women’s site for what’s cool
Tipdish – connecting advertisers & PR w/ social media influencers
Youdesignit kinda like threadless.com

Afternoon Keynote speaker from DataCert. DataCert is an IT solution that helps companies reduce, track, & analyze legal expenditures. Read program for more info.
Started in .com boom
Bootstrapped because had to
Investors currently like vertical plays, didn’t like that in 90s.

Founder must
Articulate a message & communicate it
Build team
Convince everyone around him that the business will succeed

To get noticed, make noise in market.
Form partnerships w/ competitors.
Make a “good enough product” and then improve it.

Always takes longer than expected.
Turned down investors when previous investors would lose share value.
Watch out for strategic investor with “first offer and right of refusal” built into contract

Blair Garrou – DFJ Mercury, closing speaker
Likes capital efficient deals
Invested in Podcastready, unwired nation
Consumers want: personalized info, stay in touch with others, entertainment
Merger & acquisition best exit strategy right now w/ IPO tough due to Sarbanes and Private Equity in the tubes from the last few months.
What’s hot: ad network tools & platforms, central communications, foreign knockoffs of youtube/myspace/etc
Facebook ecosystem big, but won’t last forever
Likes community in a box – i.e. Ning

Is Web 2.0 a fad?
Too much capital w/ too few good deals
How to monetize
100k users not much anymore
Adolescent fickleness

What is Web 2.0 about?
Communication, self expression, shared knowledge & opinion, honesty, not reinventing the wheel

Big 5 acquirers – AOL, Amazon, Ebay, Yahoo, Microsoft
Google in league of its own
Get 100k users before talking to VC

You can listen to some of the recordings on IdeaTango.com. For more information, check out the Houston Startup Blog at www.startuphouston.com.

Happy Startup-ing!

Bryan Daigle

Moving IdeaTango Blog

Bryan Daigle — Mon, 15 Oct 2007 18:28:30 +0000

Because we now have blogging capability on the NEW IdeaTango.com, we’re moving the IdeaTango.com blog here. Not only will I continue writing the blog, but now famous inventor of the French Twister, and partner of IdeaTango.com, Lisa Lloyd will be sharing her wisdom on the new blog.
This blog at bryandaigle.com will become my personal blog (less corporate) to share my thoughts with inventors, entrepreneurs, and to anyone else who will listen. Let me know what y’all think of our new site, we’re super excited!

Bryan Daigle

What Happened at the Houston Invention Association Tradeshow?

Bryan Daigle — Wed, 15 Aug 2007 04:53:42 +0000

To answer the question posed by the title of this post, more that we expected. The HIA event turnout for the show was double what they expected. The show topped out at 250 attendees and the little room was jam packed with inventors, businesses, and service providers. I was impressed!

An MBA student that has been working with me for the summer thought of a great idea to get people to visit our booth . . . hand out free cake! It worked, we didn’t have to take any home. We of course decided to continue our trade show trend of wearing our light bulb (or chef, or pope) hats to draw attention.

The quality of the speakers is what impressed me the most. Apparently the guy who invented the reusable home air filter is from Houston, who knew? He spoke. So did another guy who made money on a weed-eater attachment, and now owns a product development company in Houston. So did Richard Scruggs, a very well connected venture caplitalist, angel investor, serial entrepreneur, and currently head of the Texas A&M Center for New Ventures & Entrepreneurship. All the speakers gave great advice such as:

make sure your invention sells before putting too much money & time into it,
be persistent,
don’t listen to “experts”,
look to friends & family for startup money,
start small & grow big (not the other way around),
learn and read everything you can about invention and entrepreneurship.

Helpful advice no matter what your going into.
Bryan Daigle

Some Pictures from the Show

Where is my laser pointer?

Bryan Daigle — Thu, 14 Jun 2007 19:41:32 +0000

We recently pitched our company and business model to a group in Houston. The main purpose of the venue was to practice our presentation as we’re thinking more about getting investors later this year and to get feedback about how we can improve the presentation. Overall, the reviews were very positive, and the feedback very helpful. We’ve posted the audio file on our site, but restrict access (so our competitors won’t know our secret weapons). If you’d like to listen to it, send me an email. Investors, if you’d like to write us a check, paypal me!

Bryan Daigle