Many times startups seeking capital from professional or institutional investors focus almost exclusively on the financial aspects of the pending transaction. This is misguided to a degree as the primary benefit professionals bring to the negotiating table is not their dollars but rather their sense, experience, contacts and their existing relationships. Entrepreneurs who have prior experience with raising money have learned this lesson. Successful entrepreneurs almost inevitably get more than a cash infusion, they get a partner with additional non-financial resources dedicated to seeing them succeed. Often times ventures that just score funding and get little other assistance are not so fortunate.
So this story from freshnews.com about Simply Hired - the world's largest search engine for job seekers - hi-lights what a group of veteran entrepreneurs look for in their fund raising effort. Very impressive list of investors and board members who bring much more to the venture than mere money.
Simply Hired, a Silicon Valley search engine startup, today announced the company has raised $3 million in a Series B round of angel financing. Lead investors include Rajeev Motwani, a Stanford University computer science professor, early investor and technical advisor for Google, Inc. (Nasdaq:GOOG), Ron Conway, founder of Angel Investors, LP, early investor in both Google and Ask Jeeves, now part of IAC Interactive (Nasdaq:IACI), Kanwal Rekhi, successful serial entrepreneur and former CTO of Novell (Nasdaq:NOVL), and Garage Technology Ventures. The company will use the funds to continue product development and market expansion.
The money is important, since without it the venture likely won't go forward or will evolve in a manner that limits its potential. But accepting "dumb money" early in a venture's life can be almost as harmful. If you are seeking early investment, seek out and find those financiers that can bring more to your start-up venture than cash. It will pay dividends far in excess to effort required to convince seasoned pros that your venture is worthy of their consideration.