Seed Capital From Angel Investors: Dave McClure, Founder, 500 Startups (Part 9)

By guest authors Irina Patterson and Candice Arnold

Irina: What do you think angels could do to improve the entire entrepreneurial ecosystem?

Dave: It seems the most important thing is providing small amounts of capital early on when companies are getting started and providing advice and support, either in business or product development or marketing.

Usually, it’s not the size of the check but the initial validation of the idea and some amount of capital to get started really is the role that the angel community plays for these companies.

Irina: What do you think entrepreneurs could do to increase their chances of success?

Dave: With most entrepreneurs, I tend to want to have them tell me how they solve a customer problem. So, I think having a clear definition of who the customer is, what the problem is, and what the customer acquisition costs and value generated are.

I think if they’re able to take on a more search-oriented approach to the process and, ideally, they’re using data to make decisions. We’re always conscious that companies tend to have really long product cycle development.

In some cases that makes sense. In most cases we’re looking for what we call “minimum viable product” or take worst-case solutions to a problem just to validate whether they’re on the right track.

Having an understanding of who the customer is and what problem you’re solving is very helpful in getting that product out of the door quickly. Being able to test whether customers use it or like it to inform your additional product development and marketing process.

Irina: Great insights, Dave. Thank you.

This segment is part 9 in the series : Seed Capital From Angel Investors: Dave McClure, Founder, 500 Startups
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