Deal Screeing - What's Happening Today @ the ACS!
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In the early days of the Internet it was routine to see people 'paving over the cow paths', i.e., using new technologies to speed up old business processes. From this they got incremental new efficiencies. Those businesses that designed new business processes around the capabilities of the new technologies generally got order of magnitude improvements in efficiencies.
Enter the Angel Capital Summit...
Historically, most events involving investor presentations have used the 'send us your business plan' methodology. This is problematic, as the time necessary to fully comprehend a business plan is measured in hours - sometimes days. It's also more or less the same way we've been doing this for 20 years. (Name another business process that hasn't changed in 20 years...) We can do better, and we are.
Think of this time requirement to understand a business plan as a natural barrier to efficiency. As such, it generally means that the most deals that can be presented by an average sized organization with the resources at hand floats between 4 and 8, and that the time applied to the deal screening process by the organization managing the event is generally spent insuring that there are fewer things wrong with the presentation then there are right with it.
This creates a negative starting point for the conversation w/ the entrepreneurs.
Most that apply get a simple 'Thanks for applying' email telling them that they were not selected. Those that get selected for auditions generally get 'Here's what we don't like about your business' by a small group of people that may or may not have the necessary backgrounds to appropriately evaluate the business opportunity.
These are limitations to effectiveness imposed on the process by the limitations of the design of the process. In the end, this negative starting point makes the deal screening process more predisposed towards avoiding failure than achieving success.
Try raising your kids like this. It's not good.
So here's a question: What happens when you distill the deal screening process down to an essential number of standardized and comparable sets of information, move it all up onto a database and allow the collective intelligence of a broad spectrum slice of the investor community to assess it?
The answer is that your organization now has more time available - which means that you can then focus on what's right about a company and less about what's wrong with it. This allows a change in focused to success (Getting good deals done right.) and less of a focus on avoiding failure (Avoiding the embarrassment to an organization generated by a bad presentation.).
This is what's happening right now @ the ACS. The ACS deal flow management system (DFMS) carries a file for each applicant. This file includes their ESF Benchmark Survey, their Exec. Summary and a link to their website. The 37 member deep ACS Exec. Committee and the Partner organizations have access to these files. It takes about 10-20 minutes for an investor to review a file and decide if they want to learn more. 'Learning more' generally involves a phone call or an email to the entrepreneur asking for more information, a request for a face to face meeting or perhaps their business plan.
Within the ACS DFMS each file is scored and commented on. When getting additional information is appropriate, it's asked for. (Note that we'll be releasing this information - these scores and comments - back to the entrepreneurs after the event, and that they got their Benchmark Report in the application process. There is much learning happening here.)
So think of the DFMS we're using as a 'Web 2.0' toolkit for investors and entrepreneurs. It allows the use of the collective intelligence of the investor market for deal screening purposes in a standardized framework that facilitates comparisons while also creating an information rich environment for entrepreneurs to do their business planning within.
Cheaper. Better. Faster.
Cheers,
Kevin
