September 5, 2012
As an entrepreneur pitching to angel investors, you have a lot on your mind. You have to nail your pitch and anticipate their questions, all while staying cool and charismatic. Preparing your pitch is of paramount importance, and a crucial component of this is knowing exactly who you’re pitching to.
We’re here to help.
Tech Cocktail’s Angel Spotlight Series is a weekly feature of prominent angel investors around the country. We give you the lowdown on their investing strategy, top advice, and deal breakers, and hopefully reveal that, just like you and me, angels are people, too (with deeper pockets).
This week we chat with Pavan Nigam. Nigam is the founding partner at Inspovation Ventures, the founder at Badger Entrepreneurship Forum (On, Wisconsin!), a member of the Band of Angels, a founding member of WebMD, founder and former CEO at Trackle, founder and former CEO at Cendura….I could go on.
Needless to say, Nigam is a highly accomplished entrepreneur and investor.
Your investing philosophy
Pavan Nigam: Since Inspovation comprises of ex-founders and CEOs who enjoy company building, we invest in areas that are of interest to at least some of our members and in which we can add value. This includes cloud services and infrastructure, mobile apps, ecommerce, and health care IT. Also, we only invest in Bay Area companies.
We recognize that, at the end of the day, early investing is primarily a bet on the team. Are they motivated enough (and for the right reasons) to overcome the inevitable hurdles they will face? How long have the founders known each other? Is there a technical cofounder? Does the team have the domain expertise?
Is the solution riding a trend that is making it uniquely possible now? Such trends could be technical, cultural adoption, or even government regulation. Does the company and team have some clear unfair advantage?
In most cases, we look for some level of customer validation of concept. Often we assist in that by leveraging our extensive network.
Finally, we do try to get a sense of the size of the opportunity. We are equally comfortable in investing in companies whose products fill a feature gap for potential acquirers and companies that could end up as large entities in their own right.
Top piece of advice to entrepreneurs
Nigam: Do not fall in love with your product or business strategy. Rare is the company which succeeds on the basis of their original implementation of either. Leverage the ability to be nimble that a young startup offers and be ready to pivot when needed.
Spend time with your target “customers” and constantly validate your solution.
Common advice that you disagree with
Nigam: Fiercely disagree with the Peter Thiel-led notion of dropping out of college to do companies. It is justified based on outliers such as Gates and Zuckerberg and grossly undervalues the lifelong benefits of a college education.
Top mistake entrepreneurs make when pitching to you
Nigam: We find it very disconcerting when entrepreneurs vastly overstate the deals and agreements the company has achieved. This could be customer contracts, employment commitments, or partnership arrangements. When the discrepancies are discovered later as part of due diligence, it does create a “trust” issue and we always pass.
Another red-flag mistake is when the team starts selling us on their multiyear financial plan or on the exit scenarios with unusual enthusiasm, which should be normally reserved for the product and the business opportunity.
Your most cherished accomplishment
Nigam: I guess, it would be the founding of WebMD. Having been involved with “geeky” companies prior to that (SGI, Intel) and since then (Cendura), I always wanted to be involved with a company that my mom, wife, kids, and close friends and families would “get,” and WebMD certainly did that. Also, it gave me an opportunity to work closely with folks such as my cofounder Jim Clark, John Doerr, and Dick Kramlich. And the best part was the talent and the camaraderie of the core team. Many in the team, since then, have founded several companies and have become highly successful entrepreneurs, executives, and VCs.
In your free time you can be found…
Nigam: Hanging around with the family, reading a book, hiking, or traveling.
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