52 Bicycles

Jim Woodward, of Launchpad, a Boston-area angel group, discusses the reasons he turned down startups: 

Starting the new year, I thought it would be instructive to look back over 2006. Launchpad received about 500 plans last year. Ham Lord, our executive director, screened out about 350 of those that were too far away or had other clear faults and turned the remaining 150 over to the Screening Committee, of which I’m a member. I gave about fifty of them a strong “NO” for clear reasons. 

His key reasons, in descending order, were:

1. Inadequate team
2. Crowded market
3. Technology in search of a market / product that is really just a feature
4. Naivete about the investment process
5. Money issues (too capital intensive, too small an opportunity, unrealistic valuation)
6. Lack of barriers to entry
7. Legal/structural impediments to a deal (i.e. don’t use a broker!)

The team issue is key - when pitching a business on day one, all you really have to sell is yourself - anything you show in the early going is really just a manifestation of your own qualifications. (Good presentation means you are a good presenter/salesman. Prototype shows you have chops as an engineer or a manager of such. Etc)

One should definitely read the piece. It’s short, and he is always insightful.

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