Seed Capital From Angel Investors: Basil Peters, CEO and Fund Manager, Fundamental Technologies II (Part 12)

By guest authors Irina Patterson and Candice Arnold

Irina: If you were to get into a situation where you could collect dividends for a long time, would you still think of early exits?

Basil: There are two parts to the question, I think. One part is, is that a good thing to do? Another part is, do I want to do that? I’m kind of an exit guy. I like exits; they get me excited. So, I tend, personally, to prefer companies that will exit.

But I know people who like companies that have dividends. They are very rare, though, so it’s not a very good assumption for entrepreneurs to think that they’re going to build companies that are going to cash flow and there are going to be dividends. That’s a very, very unlikely scenario for a company with investors.

If an entrepreneur is thinking of a company that will be a dividend type of company, he’s starting to think about a thing that would be traditionally be described as a lifestyle company. Those can be very good investments for friends and family, but not usually, statistically, as good for traditional angel investors.

Irina: Do you have an investment success story you would like to share?

Basil: I’ve got lots of examples of investments that I’ve been able to talk about. Sometimes what happens is I make an investment and then it gets sold and then I can’t talk about it. There’s often an NDA (non-disclosure agreement), especially on the price. I do have investments where I’ve actually written up case studies.

Parasun Technologies, Inc. is a great example. I love the Parasun story.

I use that when I teach entrepreneurs because in that case I’m allowed to talk about the exit valuation and the exit process. Part of the reason I can talk about that one is that the company has been sold twice. That one’s a case study that I’ve actually written up. It’s on my blog in lots of detail.

Another one that I like very much is BrightSide Technologies.

It is another company where I can talk about the details, and I do on my blog, because it was bought and the price announced.

Irina: What do you think angel-backed founders could do to increase their chances of success?

Basil: That’s easy. The most controllable success factor for entrepreneurs, not just in my opinion; I think this is a universal truth. The most controllable success factor is having good mentors.

Irina: But one has to be mentorable, right?

Basil: Yes. And if you’re a mentor, one of the important thing to be able to figure out is which of the entrepreneurs is mentorable. I think it’s important when I say controllable because luck is an element in great success. Luck is not so controllable, but finding mentors is something that you can determine. If you say, I am going to find good mentors, it may be a lot of work but it is a controllable success factor.

This segment is part 12 in the series : Seed Capital From Angel Investors: Basil Peters, CEO and Fund Manager, Fundamental Technologies II
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