Randy Thompson is a social scientist and a marketing professional with degrees in political science and English literature--what some would consider an unexpected beginning for a career in angel investing. However, over the past 15 years he has invested USD $75 Million in almost 300 companies, most recently through his firm, Valhalla Private Capital.
During the live session "My journey through angel investing... what a heck of a ride", part of the Venture Academy, organized by IDB Lab, XCALA and ConnectAmericas, Randy shared some of the knowledge he has acquired throughout his career--and which has earned him the recognition of Angel of The Year in Canada, twice.
“The big money pro tip right now is that the entrepreneur and investor relationships are a lot like Tinder”, Randy said in reference to the often lack of understanding between the different sectors and an ideal investor, a common situation in technology companies.
One of the most important pieces of advice from Randy, President & CEO of Valhalla Private Capital, is being honest and transparent when meeting with an investor--because they will eventually talk to each other anyway. This means that most investors know that you’re lying when you tell them everything is going great in your business and on its expected course, and it’s not the case.
“One of the best things you can do is actually tell investors ‘I don't know what I'm doing over here so we need to get a CFO’ or ‘we're having trouble entering this marketplace right now’. If you tell the truth and tell people what your weaknesses are, some investors are going to go ‘oh I know exactly how to solve that problem’”, suggests Randy.
And not having a clue about the future of a company? That uncertainty is not exclusive of entrepreneurs--investors are all too familiar with that feeling.
“As an investor I know you're lying to me with the projections and by the way, you know I’m lying to you when I look at them and go ‘Oh, these are very good!’, because we don't have a clue if the company's either going to take off, if it’s going out like this, if it's going to fail or it might bump along”, says Randy.
So, why do they pretend to ask for projections? “The reason we ask for them is we want to see in your head how you're planning to roll your business out and where the revenue comes in from”, answers the CEO of Valhalla Private Capital.
Randy pointed out that whoever trusts you with their capital has rights as an investor, but also recognizes investors aren't always right. So, his advice? Keep an equal relationship between investors and entrepreneurs. A trend he has seen in South America is the inequality amongst these two actors, and “that's a recipe for disaster”.
For more valuable advice on finding the right investor for your company, watch the complete session and don’t forget to register and be part of the upcoming Venture Academy live sessions!