Get In Get Out: 100 Rules for Successful Start-Up Deals

This book is designed to provide an overview of early-stage angel investing from both the investors’ and the entrepreneurs’ perspectives. While both parties are coming at the deal for different purposes, each shares the common goal of making money. In our humble opinion, it is critically important for both parties to understand the needs, triggers, and expectations of the other in order to be successful. The 100 rules we discuss in the book are not, by any means, the only rules or guidelines for early-stage investing. There are thousands of rules that are constantly changing around the world and even from one region of the country to another. The truth is, with a little experience and luck, you will know very quickly if investing or raising money in this class of investment is something you enjoy doing and something where you can make money. FROM THE INVESTORS PERSPECTIVEImagine sitting down in your favorite chair and looking out the window admiring your perfectly manicured lawn and realizing that you don’t have a care in the world. Why not? You’ve been successful and you should be proud of it. You’ve managed your money well and can pretty much do what you want, when you want. But then again, something appears to be missing. You don’t feel as productive as you once were. You want to do something exciting again. You want to feel needed. Well, there is a whole world out there made up of wannabe entrepreneurs with dreams and visions, but no way of funding it. That’s where you may be the perfect fit. You have money, you have great business acumen, and all you are missing is finding the perfect ride with a team of start-up junkies ready to build a company. If you find it, why not take your money and start investing as an angel? Yes, it can be hard. Yes, it can be risky. But, it can also make you and the entrepreneur you are backing a lot of money. As you can imagine, finding your first deal and stepping up to the plate for the first time can be both exhilarating and daunting. Hopefully, you took the advice of your friends and joined a professionally-managed angel group, or, at the very least, decided to co-invest with other accredited investors in order to share due diligence and mitigate some of the risk. As a first-timer, it’s easy to become enamored by the entrepreneur sitting across the table from you with big plans and an unbelievable technology. The most experienced investors will tell you stories about amazing products that defied the laws of physics. But use caution, reality is much different than a concept. It’s tough to take something on paper and turn it into a viable product in a market where real customers are willing to pay real money. FROM THE ENTREPRENEURS PERSPECTIVEThere are thousands of entrepreneurs with great ideas and an ability to see markets before they develop. Unfortunately, there are only a few entrepreneurs who have the ability to get the funding in place to make those ideas a reality. That’s why it is critically important to understand, as an entrepreneur, what investors are looking for. While many books will tell you to focus on showing an investor how your company can get from zero to $50 million in sales, the best and brightest early-stage investors know that such a trajectory isn’t probable. As you will discover from reading this book, building a great company to create a great return takes a team effort. Make sure your investors want to be a part of your team and let them help you from day one. Remember, there are many more entrepreneurs than investors, so be prepared to have to work at finding one who is willing and able to support your vision.

Michael Cain is the founder, investor, and managing partner of Wilmington Investor Network, LLC, an angel investment fund he formed in July 2004. He is a founder and managing Partner of Guardant Partners, LLC, an investment management partnership and also a managing partner of their special situations fund located in Greensboro, North Carolina. He is an investor and former manager of Emergent Growth Fund Two in Gainesville, Florida. His angel funds have invested in excess of $25 million in over 40 early stage startup companies. Each investment requires continuing angel involvement, mentorship, advice, and consultation. Cain is Chairman of the Angel Resource Institute (ARI), a non-profit angel research and education foundation originally created and funded by the Kauffman Foundation of Kansas City. D. Troy Knauss is a partner in a number of Angel funds and networks that invest in early-stage, high-growth and turnaround companies. Knauss has over 20 years of experience in family, growth, and start-up businesses. In addition to his fund activities, Knauss is a multi-exited entrepreneur with start-up and growth management experience in food processing, marketing and brand building, software development, and eCommerce sales channels. Knauss is an active early-stage angel investor in multiple companies and serves on a number of Boards. Knauss is on the Board of Trustees of the Angel Resource Institute, a spinout of the Kauffman Foundation. Knauss is also an adjunct professor at Wake Forest University, serves on the Board of the Greensboro Partnership and the Board of The Launch Place, both economic development organizations.