Earlier today, I watched Fred Wilson and Ben Horowitz debate lean vs fat fundraising approaches (very different from “lean startup” concepts even if often confused). The reality is very very simple: unless you are a celebrity/proven founder, “lean” is your only option. I don’t buy for a second that Horowitz would write a “fat” check to an unproven entrepreneur no matter how big the idea.

Too many people think they can raise money on an idea, a powerpoint deck, or even a mere prototype. From what I see, that is the exception, not the norm, regardless of chatter about a lot of seed money swirling around.

An idea and vision is necessary but not enough. Maniacal zeal is necessary but not enough. A smart, clued-in team is necessary but not enough. A first version of the product is necessary but not enough. You are competing against other funding-hopeful startups that have achieved all that PLUS initial traction PLUS a fit with the investor’s sweet spot.

It is not that the bar keeps moving in front of you, but rather that the bar has been at that spot for quite a while. Investors and the media just rarely clearly acknowledge this fact.

In Software/Internet, this means that you need to boil your very big idea down to something achievable. You don’t give up on the big idea, but you have to get ruthlessly pragmatic about the steps to accomplish the dream. This feels painful but it brings discipline and focus. You will burn through savings. You might have to consult on the side. You will move agonizingly slower than you want. Even worse, you will risk a more established entrepreneur wading into your space and raising a bunch of money with what seems like a snap of the finger. But that’s what it takes. It’s not for the faint of heart, but goddamn, there is *nothing* like it.

More:

• For a great post on the topic from an early-stage investor, see Eric Paley’s Stuck on Ramen
• For many great tips, see Venture Hacks
• For an excellent book on Venture Capital, get Jeffrey Bussgang’s Mastering the VC Game — to be honest, I was expecting another bland overview of the VC world where nothing of substance gets disclosed, but Bussgang writes clearly and with much more honesty than most. So thumbs up from me, although the only *real* way to learn about all this is to privately talk to other entrepreneurs who have been through it.

P.S. for those curious, in Aprizi’s case, we did a very small F&F round and do not consider ourselves ready to do a seed round (much to the chagrin of my wife). We quietly shifted to open beta just recently, and we know that we have more to accomplish and prove. We do talk to investors here and there, but only to get feedback and new perspectives on our plans.  Right now, it’s all about execution. If you know of a great web developer in New York looking for a great team and new challenge, send them my way (giff.constable @gmail)!

http://giffconstable.com/2010/05/the-cold-reality-of-first-time-funding/ 

Dear ACA Member or Summit Attendee:

We have made it to the next step in the process to "fix" the entrepreneur and angel issues in the Financial Reform bill. Last evening, Sen. Kit Bond (R-MO) introduced amendment number 4037, with a bi-partisan set of co-sponsors including: Sen. Scott Brown (R-MA), Sen. Maria Cantwell (D-WA), and Sen. Mark Warner (D-VA). You can learn more about the amendment via http://thomas.loc.gov/ and click on the "Restoring American Financial Stability Act of 2010" link near the top of the site.

It is unclear when the Senate will vote on this amendment - it could be very quick, or it might be in the next week or two. We want to ensure that this amendment is passed, and because there are so many amendments and this issue is not as large as others in the debate, we think it is important for as many Senators as possible to know about the amendment and how important it is for small businesses and jobs in their states.

So, we're asking that you send in letters and emails to the Senators in your states as soon as possible. The links below provide you with quick tools to do so:

Letter template to send to your Senators
Wall Street Journal editorial
Letter from 9 associations supporting changes to the bill
Links to the Senators and their contact information (www.senate.gov/general/contact_information/senators_cfm.cfm)
We greatly appreciate the support and action many of you have taken to date and thank you in advance for your help. Please feel free to forward this to your colleagues.

Regards,

Marianne Hudson
Executive Director
Angel Capital Association



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Our members have a broad array of business experiences and skills they bring in helping to screen and evaluate potential portfolio companies. They also serve as a valuable resource for guidance and advice to entrepreneurs and their businesses once an investment is made.

ATA is not an investment fund, but rather, a network of investors who make individual investment decisions after working together to evaluate candidate companies. Investments are made through single-purpose LLCs made up of ATA members who wish to make an investment.

ATA is a member of the Angel Capital Association.

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