I have posted two previous times about the problems i believe that are prevelant and will share them again here for i see some relevance.
Because 600,000 companies a year are founded in the United States alone and many of them seek outside funding, there are many, many web sites that take aim at this lucrative market and purport to introduce entrepreneurs to investors. The sad fact, however, is that while it's very easy for a site to sign up thousands of entrepreneurs (who
want the money), it's virtually impossible for them to sign up investors (who
have the money.) That's why none of these sites can legitimately point to their track record for getting entrepreneurs funded (despite any claims to the contrary). Instead, they make their money in one of three ways: selling you as a lead to service providers, selling advertising against your page views as you chat with other entrepreneurs, or charging you listing fees and then up-selling and re-selling you when you don't get funded, and then the upfront due diligence fee's which should be escrowed for both parties protection especially if contact was web oriented.
Then there is the scams which is for another day.
CAPITAL INVESTMENTS
The problem: The Atlanta area, and much of the Southeast in general, suffer from lack of capital investment into start-up stage companies, despite booming population and economic growth, the long-established presence of some of the world's most important companies, and being home to outstanding centers of academic excellence. Because of certain systemic defects in the Atlanta early start-up market, many entrepreneurs have become discouraged about the opportunity to start their businesses in Georgia. This problem plagues much of the southeastern United States.
The causes: Atlanta, relative to markets like Boston and San Francisco, is a relatively young capital market. Consequently, there is not the broad, established base of investors that exists in these other markets. Further, entrepreneurs are generally not as sophisticated in their approach to raising capital in the Southeast as they are in more developed capital markets. Symptoms of the dysfunctional market in Atlanta include the following:
- Most entrepreneurs in the region are untrained in how to identify and approach investors, how to credibly present their opportunities to investors, and how to make their companies attractive from an investment perspective.
- Much of the investment community in Atlanta is disengaged from entrepreneurs. They do not make themselves available to coach and teach entrepreneurs how to make their opportunities more financially attractive.
- Most "professional networking" meetings are attended neither by investors nor by executives of emerging high-growth companies. The mass of service providers and salesmen have scared them off.
- The few consultants who are competent to advise companies are prohibitively expensive.
- Most "professional networking" meetings are located in the parts of Atlanta to which are the least convenient for most investors to travel.
- Almost none of the investment community in Atlanta is willing to tolerate the risk associated with what used to be called true capital opportunities.
- Unscrupulous members of the business community attempt to monetize their rolodexes by promising introductions to potential "investors" in exchange for buying their professional services or for paying thousands of dollars to deliver presentations ("pay-to-pitch") to rooms of strangers. Others act as amateur brokers, seeking finder's fees for early-stage investments that result from their introductions. All of these forces create friction in the start-up market that prevents capital from locating investment opportunities.
- Successful entrepreneurs who achieve a successful high-value exit for their companies frequently withdraw from the entrepreneurial community, often because they realize that they lack the skill and experience to invest in other, Start-up companies to give someone else the chance that someone years ago gave them.
- The myths: Many entrepreneurs believe that there is no early capital available in Atlanta, and investors think there is a scarcity of quality investment opportunities. Neither is true, but the environment is dysfunctional and there are systematic characteristics of the environment that actively prevent capital and quality opportunities from finding one another.
The solution: Entrepreneurial community and investors (current and potential), with
Opportunities and capital to find each other in local markets.
