March 20th, 2012

I’m confused, scared, and more than a little ashamed


I’m confused, scared, and more than a little ashamed

Now I realize that I’ve developed—even perhaps cultivated—this persona of being a “rah rah” cheerleader for all things startup in Portland and Oregon. I realize that—at times—I’ve been so Pollyanna saccharine-sweet about the potential for entrepreneurs in our area that it’s made people cringe. I get that.

But I also like to think that, even with that, I can step back and express indignation. When warranted. And this? Boy howdy, I think it’s warranted.

Now, let me preface this rant with the following: I’m both a champion and a critic. Sitting here on my ass. Doing not much. But writing. And any—ANY—entrepreneur who goes out there and starts a company is better than I am. Granted.

But this isn’t about entrepreneurial efforts. It’s not about startups. It’s about what’s broken in the Angel investing community in our region.

And I’ll also say that this may lose me more than a few friends in organizations for which I’ve been a steadfast supporter. It may garner me a bit of ill will with those who I’ve thought of as colleagues and confidantes. And it may offend some folks whom I hold dear.

So be it. I’ve got to say it.

WTF Angel Oregon? This is one of your concept companies? Blanket Booster? Again… WTF?

Deep breath.

Now, I’m perfectly willing to admit that maybe not enough interesting companies applied. Maybe not enough capital-efficient tech companies applied. Maybe their pitches were subpar. Maybe the CEOs were having an off day. Maybe the selection committee was feeling a little grumpy toward tech.

Maybe maybe maybe. Still. A bar. That holds a blanket off your feet. That’s one of the most interesting concepts you’ve seen this year?

I get that not every tech startup is interesting. I’m willing to wrap my head around the fact that Soothie Suckers had a broad demographic and seemed like a sound Angel investment. I’m even willing to stretch my imagination that velcro horse boots are a better risk than tens, if not hundreds, of other tech startups in our region.

But, I’m struggling to grasp how a rail that holds your blanket off of your feet is a better investment than the hundreds of concept companies I’ve talked to in the past six months.

So where to lay the blame? Well, I see two immediate candidates.

One is Angel investing in our region.

Yes, it’s decidedly weak in tech. And with good reason. Very few of the Angels in our region have a tech background. As such, they’re not very confident investing in tech. Angels invest in what they know. I get that.

But. If Oregon Angel investors find a piece of metal strapped to the foot of your bed to keep blankets off of your toes a more compelling business model than companies building far more impactful and far less capital intensive ideas? We’ve got a bigger problem on our hands.

But let’s be fair. It’s not just the investors to be blamed. Or the selection committees.

Maybe, just maybe, Blanket Booster was actually—without a doubt—one of the best candidates. And if that’s the case? Well, that makes me even more sad and ashamed.

Because it tells me that you didn’t even have the confidence to take your awesome idea to Angel Oregon. That you didn’t feel like you had something worthy of investment. That you didn’t think your startup was worth submitting to a selection committee.

So problem number two: You didn’t even enter the race.

I can’t blame the selection committee for selecting this company if it was one of the best of the bunch. I can’t blame them if your startup wasn’t even if the running.

I can’t blame them that if somehow, someway, your aggressive humility prevented you from applying with your awesome concept. And that just makes me sad. More than I can tell you.

And that is even worse. Not what they picked. But that you weren’t even in the running.

Because fact of the matter is that there are any number of things we can learn from Blanket Booster being a finalist in the Angel Oregon concept stage. But most of them just make me confused, scared, and more than a little ashamed.

Ugh. What a sad note to end the day. There are so many of you. With so many awesome ideas and startups and companies. And you’re not even in the running.

We’ve got to fix this. The blame? It lies with each and every one of us. And we’ve got to fix that.

Or maybe I’ve just got something stuck in my craw. And I should just go back to my cheerleading.

(Image courtesy Motoko Henusaki. Used under Creative Commons.)

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22 Responses to “I’m confused, scared, and more than a little ashamed”

  1. Will Radik says:

    It’s never too late to start encouraging people to start productive, community-building non-profits, instead. ; D

  2. Merrick says:

    I have to admit, I hate having heavy covers over my feet, and definitely can’t keep them tucked in. While I would NEVER consider buying this thing, seniors are a huge, vulnerable demographic. My Ma has really bad neuropothy in her feet, often unable to sleep if anything touches them, and would probably love this thing.

    If they have numbers and, maybe, connections (senior homes, etc.) to prove it, it could be a pretty big, high margin product.

    Innovation doesn’t have to be cool. How many cardboard boxes do you buy each week…?

  3. Garrett says:

    I would vote that this is just another case of the folks at Angel Oregon showing their incompetence again and not a reflection of the Portland tech scene.

  4. jmartens says:

    First, thank you for this post. Incredibly refreshing and a post I’ve been waiting for you to write.

    The math of this years Angel Oregon may shed some light on their selections. Did anyone else notice the large number of “semi-finalists” this year? Well, there is a reason. All applicants pay a $20 application fee but this year, only semi-finalists pay the full fee. What to do to keep revenue high? Pick a whole lot of “semi-finalists,” of course! In other words, this event is purely about revenue for the organizers. Startups and entrepreneurs are way down their list of priorities.

    I disagree with your call for more Angel Oregon applicants. The lack of applicants is a message to OEN and the others that they, and Angel Oregon, are not relevant to tech startups. Getting us to apply (aka pay their fee) is not the answer.

    For me, my Startup wasn’t in the running because I don’t care about their beauty pagent. We are busy building killer products, winning customers, and otherwise getting shit done.

    Keep up the good work, Rick….and give us more posts like this. You may loose some large, dinosaur, supporters….but you’ll gain many, many other hard working entrepreneurs.

  5. Nino M. says:

    As a local media/green/tech entrepreneur, I post this response with mostly supportive thoughts towards Rick’s blog post. Having gone through most of the local options for angel funding at this point, except for some green-focused considerations, we’ve been very underwhelmed by the response of the local angel community to tech innovations.

    What really needs to happen at this point is a sharp focus on tech angels in the Portland, Oregon scene. While there certainly have been a decent number of tech start ups supported by the general angel community, is is severely underwhelming given the amount of tech entrepreneur brain capital floating around this town.

    OEN and Angel Oregon will always have a broad focus on the start up community locally, given the diversity of voices in these organizations with their own particular interests (i.e. tech, clean energy, widgets, etc). There’s little that can be done for that.

    As for my company, we are off to Boston and NYC for the next week and a half to pitch before potential advisors, investors and angels who have expressed strong interest in what we do.

  6. Alexis Peterka says:

    I have to agree with Merrick. My father had ALS, and I worked in a nursing home for years. This is a product that isn’t sexy or world-changing, but will probably make a lot of peoples’ lives better.

    I also know Mark Tipperreiter personally, although not particularly well. We were on the same team at the StarveUps Launch Pad event last year. Mark is a smart, confident, charismatic person – I’m sure that factored into AO’s decision.

    While I’m not a fan of how tech companies get short shrift from local angels, I don’t think slamming companies like Mark’s is the answer. That said, pulling back the covers on organizations like Angel Oregon, as Jeff did in the comments, and taking a critical look at the startup ecosystem is something we all should be doing more of.

    Thanks for taking the time to write this, Rick. I may not agree with all of it, but I’m glad you put it out there. We should be having more conversations like this.

  7. Rick Turoczy says:

    “Pulling back the covers.” Well played, Alexis. Well played.

    And in case it didn’t come out clearly in the post — because no matter how much I write I still suck at communicating — any idea that’s executed is a million times better than a critic’s opinion on that product.

    The Blanket Booster is the former. I’ve offered the latter.

  8. Pete Grillo says:

    Hi,
    I’m sorry but every time I hear the line “These investors are not smart enough to invest in my wonderful startup” what I really am hearing is the grousing of an immature entrepreneur. As has been said many times before, an investor is not required to give you their money. You want their money? Go convince them to give it to you. You couldn’t convince them that your deal was better than the next? How is that their fault exactly?

    Do your best. Be gracious in defeat. Be humble in victory. Don’t expect to win all the time. No one does.
    Pete

  9. David Shear says:

    My partners and I closed our funding round this year outside of the angel groups. We were able to put together a small group of investors who got our idea and vision. Rather than prepping for MONTHS of pitching we have been busy selling and marketing.

  10. Richard Lazar says:

    What an interesting post. I’ve raised angel money, both inside and outside Oregon, for three companies; was a member of the Oregon Angel Fund in 2008; and ran the company that won Angel Oregon in 2010. Given this background, I found your perspectives important in terms of highlighting some of the issues associated with angel investing in the Portland region (though these issues are not unique to Oregon).

    Angel Oregon is an example of “collective investing.” It is a group of people who pool small amounts of money and then vote on which company takes the prize. It is a “beauty contest” in that the company with the most votes wins. The collective is made up of people with varying backgrounds and interests and decisions are made as a group. This is what leads to the mix of finalist companies selected to go the “show.” This is very different from traditional angel fundraising where entrepreneurs must convince individual investors to write a check which is the predominant model in terms of investments and dollars. Both approaches have a place in the angel community and both processes are inefficient. In this context, inefficiency means the angel investing system is process-inefficient, some good companies won’t be selected to get angel dollars, while some bad companies (subjectively judged, of course) will.

    At the end of the day, the angel market decides which companies are worthy of angel dollars and customers then decide which companies succeed. In this age of social sharing, your post cast an important spotlight on the collective’s decision in this one context (again, whether good or bad is a function of one’s subjective judgment). I think that’s a good thing. Your voice is important and my hope is that it leads angel investors, particularly the collectives, to fund the best companies. In the end, this benefits the community as a whole. So, keep ranting. . . .

  11. Shelley Gunton says:

    Wow. I’m speechless. As chair of Angel Oregon this year and one of many, many volunteers who have put in thousands of volunteer hours recruiting companies for Angel Oregon and raising a meaningful amount of money to invest (we’ve reached a record high of $330,000 this year as a result of this very dedicated effort), I am truly disappointed that there is even a discussion about who’s more deserving than anyone else when it comes to tech, consumer products, bioscience, medical devices, green tech or otherwise.

    At the end of the day, we are all part of an ecosystem that is trying to help early stage, scalable companies get off the ground, create jobs, and be successful. At the same time, the Angel Oregon process helps all participating companies get investor ready to then move on to pitching to OAF and other angel groups, not to mention VC’s. We are at the early end of the pipeline for these start up companies that need outside funding.

    I could go on about the serious medical condition that Blanketbooster is addressing and the interest that this company has from national retailers that makes it a very scalable business. I could also go on about the “math” associated with Angel Oregon; it’s wrong. Totally wrong. To support the hundreds of programs offered by OEN, OEN makes its money on Angel Oregon by rounding up sponsors for the Conference and UpStart Day (the day-long program put on for Concept Stage Companies to help them with their business plans and pitches). The registration fees paid by the companies cover the cost of their ticket to the Conference and some of the basic overhead associated with running the Angel Oregon program.

    And, just because there are more consumer products companies competing in Angel Oregon this year doesn’t mean it is no longer relevant to tech; c’mon! The mix of companies changes year to year.

    And, speaking of change, take a look at how our ecosystem has evolved to now include opportunities for tech companies that consumer product don’t have access to, namely PIE, Upstart Labs, the PSBA, etc.

    But isn’t all of this good for our total early stage ecosystem?

  12. Tim Berry says:

    Rick, this is a very valuable post, beautifully written, and points well made. And I say that as an angel investor in Oregon, member of the Eugene-Corvallis Willamette Angel Conference (WAC) since it started in 2009, participant in every one of its investments so far.

    One thing I dearly love about business is that almost everything is a marketplace. Buying is voting, and investing is voting. And people are unpredictable. Self interest rules in these markets, and investors are spending their money. Some consider the good of the community, some care more than others about the environment, some want to change the world, most are comfortable with investments in industries they are familiar with, some care only about what gives them the best risk-return relationship. You wind those various factors up like a top or a wind-up doll, and you set them lose, and what happens is what happens. It’s beautiful.

    There is always high risk. When I write my check to the WAC each year, I hope for the best but I consider the money spent, gone, and no longer in my control. I cast my vote with my fellow members, and we see what happens. It’s like gambling in several ways, most importantly, when the wheel starts spinning you can’t get your money back. You win, or not.

    I’ve been happy to meet with people from all of the angel investment groups in Oregon, and I think I can say comfortably that all of us want to invest in companies that are based in Oregon; and that other than that, it’s a matter of counting individual votes of a loosely-connected group of individual investors, each with a vote. I’d absolutely hate to see us trying to set some sort of group weighting structure where we have to consider in some kind of algorithmic scheme different factors. One investor, one vote. That works.

    Thanks for this post. Excellent discussion. Tim

  13. Belinda says:

    I totally would buy one of those blanket thingies. I love it when an entrepreneur solves a widespread problem with a simple device. I hope they tackle snoring next.

  14. [...] on his Portland-based Silicon Forest entrepreneurship etc. blog, Rick Turozcy titled his post: I’m confused, scared, and more than a little ashamed. Don’t even try to tell me that doesn’t make you curious. Rick’s a smart guy, [...]

  15. Nancy King says:

    I’ve drafted a few different responses and have edited them all to this one sentence:

    Let’s stop having contests, awards, and look at me events and just help willing investors meet truly promising businesses no matter what they do.

  16. feralcow says:

    Presenting companies at Denver’s Angel Capital Summit
    http://angelcapitalsummit.org/presenting-companies/

  17. I do get your point, it does seem like a silly idea, especially the way it’s presented but speaking as a 36 year old diabetic with severe neuropathy in both feet I can say there is definitely a niche market for the product. Something as simple as my tiny yorkie stepping on or brushing against one of my feet can send me through the roof in pain.

  18. Alyssa says:

    First, I loved this post. Everything about it, except the part where you didn’t get all the way into the meat of the matter.

    I’m from Seattle, not Portland, though I doubt it’s terribly different. I was a large part of the startup scene here for a while – both as a starterupper and a writer about the scene. And there is another reason (or set of reasons) why a lot of people I know don’t go the angel route: It’s a pain in the ass.

    A lot of us do it once, and then swear to never do it again. Most of us fail the first time – as most startups do. And when we look back at the time and money spent raising money, the drama spent raising money, the high-school like popularity contest that is raising money, we decide not to raise money. (I did successfully raise last time….)

    I have seen so many inane companies get funded just because they had slick decks and knew the angels from “the old days” that I, for one, lost faith in people’s ability to really assess the potential of a company. (Can I just say “Earth Class Mail” and be done?) And interest in spending any time playing a game that is, well, a fruitless time suck and unpleasant circle-jerk.

    There’s also a tendency to assess diverse companies with homgoneous metrics, so good ideas just aren’t recognized. People on recognize what they already know, so you get a glut of companies and funding…

    And a lot of us, having lost investor money once, are just plain slow to want investor money again. I know a lot of people, myself included, who are working to revenue first, and THEN seeing if money will accelerate growth, or not. Sometimes it will, sometimes it won’t, so you get a lot more careful analysis. In my case, it was easier to amass industry experts on my team, build the thing out, and get a national radio show to promote it than it was to raise money. All of THAT energy actually drove the company forward, simply raising money wouldn’t have. I would have raised money and still had to do all that, but would be in the hole and further behind in terms of time…. So it didn’t make sense.

    Raising money is just not always the best way to spend energy and time. And I think people are realizing that. If you can get to the same point, debt / dilution free, in less time……

    That said, I agree with you 100%. What you are saying rings so sadly true. And makes me really glad that I didn’t go that route this time. I’m looking at the talent raised as my A round. Money will be the next round. :)

  19. I’m not a citizen, I’m from Europe. But I came across this blog post in case of the fact that there is a lack on both ends, investors and startups. This scenario is pretty similar to our location, Austria. We’re a small country with an even smaller startup scene. But, we started thinking out of the box. There is no limit to investing regarding location and business industry. Investors who are active in our region started funding businesses outside of their usual target location, because there they find enough startups fitting their preferred investment criteria.
    Tech is not the only and won’t be the only relevant business industry, but it is, of course, a growing one. I personally, prefer niche-industries, there the risks will be lower because the competition is smaller and the amount of money usually need less than in popular industries.
    In case of this development, we started http://www.INISMO.com. A professional funding platform, providing investors and those, who want to be, a variety of web-based investment tools to manage their deal flows and handle their funding negotiations via the online deal room.
    Furthermore, we developed a structured project pitch and an additional deal list. All these feature enable investors and entrepreneurs to broaden their business activity and enter the World of Funding 2.0.

  20. Sheetal Dube says:

    Rick I read all your posts and I am sorry that I missed this one.

    I know Mark personally. He is a great guy who has spent a significant amount of time figuring out the business and finding a niche that loves his product. He needs funding to scale. I have brainstormed with him on how he can get funding and frankly I could not come up with anything.

    He didn’t get PSF, he would not qualify for PiE or Upstart. So where should someone like Mark go for funding? I was pleasantly surprised that Angel Oregon gave him a fair chance. This way at least he gets an opportunity to present to the investors. I think it’s harder for non-tech entrepreneurs to get funding than the tech entrepreneurs.

  21. Sean Patrick says:

    Since when are niche-marketed, clever, scalable inventions automatically ineligible for Angel Funding because they aren’t “tech sector” items? Did Angel Oregon become exclusively tech-focused, like every single other Angel forum in Oregon that I can think of off the top of my head? …No?

    Well, then perhaps it would be best to check out the pitch and the justification for it before throwing stones. Niche’s don’t need to be sexy to be successful.

    Best regards.


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