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Investor value beyond the cash
Co-Founder of Spinner, Grouper & Freestyle Capital
Investors love using their networks to make beneficial introductions and start partnerships.
You have to be comfortable with the soft side of investing to be a success.
Lesson:Entrepreneur Turned Angel Investor with Josh Felser
Step #7 Value Add: Investor value beyond the cash
So, I'm going to share two ways, very different ways that we've helped our companies kind of increase the odds that they'll be successful. One way, very tangibly, is I can act sometimes as a BD executive.
So, one of our companies is SnappyTV. They basically allow broadcasters to take highlights of their video broadcast and share it on Twitter and Facebook and other places. So, they were having a really hard time getting their first deal done. So, I told them that I would do it for them, I'd get their first done. There really weren't any serious BD people in the company. The CEO was pretty good, but he wasn't making it happen.
So, I reached out to Mark Cuban, who I knew back when I was doing Spinner. I pitched him on using his HDNet channel as the first partner. We did the deal over email. They had their first partner and I remember saying to them, "Can we tell the world?" And he was like, "Tell whoever you want." So, the company used that as a way to get their second, third, fourth, fifth. And now they're doing incredibly well.
So, it was kind of fun for me to do it. I can't do that all the time. But it was great to kind of get really granular with a company and help them out.
The second way that I've helped some of our companies is a little less tangible, but I think it's important. It's an unsung way for us to help our companies as angels become successful. One of our companies was being acquired by a very large multi-billion dollar company. In the middle of the acquisition process, the larger company basically changed their mind. They tried to kill the deal.
There's this thing between when you're selling your company you have a closing and a signing. Usually you want those things to occur at the same time. In this case, there was a three-month window between the closing and the signing. In that window, the big company decided they didn't want to acquire our company.
Our founder was freaking out, as he should be, right? He thought it would just be a slam dunk. And the bigger company couldn't really kill the deal, but they told the founder that he wasn't material, like he wasn't the right stuff for the acquiring company.
That he wasn't serious, that he wasn't going to be a good member of the executive team. They really tried to play these mind games on him.
So, we basically had an hour of therapy every week where we just talked about what he wanted, reminding him what his goals were, reminding him basically that I will be there to help him every week focus on the endgame, which is that he wants to sell his company, and nothing else matters. This went on for a month.
So, if you were to go see a therapist, I imagine it would be similar because we mostly talked about the soft side of being an entrepreneur. If you're not comfortable with that, I think it's going to be hard to be a successful, hands-on investor. I think you've got to be comfortable with the soft side of investing and the tangible side.