‘Less TechCrunch & more reality,’ says local angel investor

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AMP PartnersNearly two months ago, AMP Partners was introduced to Minnesota’s tech entrepreneurs.

Curious to learn more about where things are at, and if AMP is serious about funding local startups, we connected with partner Daren Marhula to hear it from the source:

1) How would you say things are going so far relative to what was anticipated?

Overall, our business at AMP is in-line with our original expectations since launch. That being said, we continue to be surprised by the unrealistically high valuation expectations by many entrepreneurs out there, which has prevented us from making more investments.

2) How would you rate both the quantity and quality of dealflow?

Since the article initially ran, we have talked with roughly 30 companies. As one would expect with early stage companies, the quality has been all over the board. From those discussions our two main takeaways are that (1) valuation expectations are too high, and (2) there is too much focus on being ‘buzzword compliant’ (see below).

3) Has AMP made any tech investments? If so – what? If not – why?

Our first investment was in HomeVisor, which is an online Realtor referral service. We recently funded BuyWafers.com, which is an online retailer of silicon wafers and other electronic materials used in semiconductors. BuyWafers.com will be launching in the next couple of weeks.

There were a couple of other companies we met with that we liked and we would have invested in, had the valuations been more realistic.

4) What advice would you have to future entrepreneurs pitching AMP?

There will always be a divide in valuation – investors want the valuation to be lower, and entrepreneurs want it to be higher. However, having an idea is not worth a million dollars (or more).

Especially true when you want to use investor money to pay yourself while you build it out/prove concept. Starting a company involves sweat equity from the founders, and if the founders are not willing to contribute sweat equity for their ownership, then we are not interested. If you throw out a high number simply to see what you can get, our answer will be a quick ‘no’ and we will move on. If you approach us with a realistic valuation, we are much more likely to be engaged.

Stop reading TechCrunch and focus on building your business; get your valuation expectations in check and when you come in to pitch your idea, we don’t want to hear about exits, pivots, and MVPs…we want to see results.  You don’t get funded because you can use all the buzzwords, you get funded because you have a great opportunity and run with passion.  If you have that, let’s talk.

Comments

  • Joe Serrano

    Daren,

    I think it would be helpful to provide us with what you feel is a “fair” valuation and and at what stage. Also, please compare and contrast with other parts of the country – because that is what we will have to compete with. Also, how do you feel about convertible notes? Moreover, did you offer terms for the opportunities you would have in had their valuations been more “realistic”? 

  • Entrepreneurs Ally

    Sounds to me like Daren doesn’t have much respect for the entrepreneur. Entrepreneurs SHOULD be thinking about exits, pivots, and MVPs. And yes, ideas, accompanied with a plan for execution, can certainly be woth $1M+. I would certainly stay away from an angel with this little respect for the entrepreneur. Too much ego.

  • http://twitter.com/kaufenberg Justin Kaufenberg

    I don’t disagree with a lot fo what Daren wrote, but to Joe’s point, it would be great if he’d provide some additional thoughts and color in the comments. I’ve always hated the generalities spoken around funding at an early stage. There are some consistent benchmarks for most investors, and I’d love to see them be more public about those. Joe asks some good questions that I too, would love to see Daren’s thoughts on.

  • http://www.facebook.com/justinpbarrett Justin Barrett

    We met with Daren. He’s excellent. But, I think he’d agree that AMP is in a class of earlier, early-stage investing. Their strike zone is tough: idea to pre-revenue stage with results, under $1M target valuation range. There certainly are some winners there, but to Justin’s point above, great to be very clear on the desired metrics for early-stage success/proof. Correct me if I’m wrong on the strike zone Daren…

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