September 13, 2010
This is a guest post written by Backupify founder Rob May.
In November of 2009 I was struggling to raise money. Backupify, the SaaS backup company I started in Louisville, KY, was seeking $500,000 in angel funding and had only rounded up about 20% of that. It wasn’t going well. I had read about Open Angel forum when Jason announced it, but was reluctant to apply given that we were an early stage company based in the Midwest.
In December, Jason Calacanis signed up for our service and sent me a note asking if we were raising money. (Tip number 1 for entrepreneurs – investors like to invest in stuff they use.) I told him we were having problems and he suggested we apply to Open Angel Forum in LA to present in January. We were accepted, but with almost no money in the bank and a buggy early stage product, I almost didn’t go.
Most of the people we had pitched up to that point didn’t understand the larger vision. And, investors in the Midwest are more risk averse in general than investors in other parts of the country. After talking to Jason about it, he convinced me we would find a very different reception with the group he was putting together.
Once I decided to go, it kicked off a whirlwind week of fundraising. I had previously drawn some interest from angels on the VentureHacks AngelList, but they weren’t ready to invest in a company in Louisville. I used the trip to connect with them and discuss moving the company to a startup hot spot like Boston, NYC, or the Valley. On top of that, we had early discussions with two other VC firms, and now that we were getting traction from OAF, they wanted to talk more seriously. (Tip number 2 for entrepreneurs – momentum matters so do what you can to create it)
The first Open Angel Forum was a rockstar group of investors, which made it an experience unlike any other presentation up to that time. At the last minute, I decided to scrap my slide deck. I had given my pitch so many times that I knew it by heart. I just walked the group through the product while hitting all the main business points I would hit in other presentations.
As soon as I was done, I knew these investors were different. They instantly got the big picture. I didn’t get questions like “why does anyone want to backup twitter?” Instead, people realized this was about a change in where data is located and how people control and manage it. I was getting questions about adding new business services, migrating data around the cloud, building apps on top of all this data to span data silos… these guys were smart and visionary. I instantly liked them. (Tip number 3 for entrepreneurs – active angel investors have more guts and vision than people who have money but don’t do angel investing, so seek them out)
The event was a blast and my presentation was a hit. Some investors even wrote about how I drank a beer while I was presenting. (Tip number 4 for entrepreneurs – I don’t recommend you drink while presenting, but it fit this event, and in my defense, it was Fat Tire Ale, which I love but could not get in Louisville) We started at 7pm, and I had to leave at 10pm to catch a red eye across the country to Boston for another presentation. I mentioned that and some guy in the back yelled “I love it!”. (Tip number 5 for entrepreneurs – many angels were entrepreneurs too, so they love to see your hard work and scrappiness).
All in all, we ended up with 9 angels from the event interested in our deal, and 2 VC term sheets as a result of the momentum. We increased the round from $500K to $950K and still didn’t have room for everyone, so we ended up taking investment from 3 OAF angels: Jason Calacanis, Shervin Pishevar, and Chris Sacca. With their brains, reputations, and connections, we easily got into top tier VC firms 6 months later when we were raising our Series A round.
It all worked out well for us. Our angel round helped us refocus from a consumer service to a business service and to get our first business product to market (a backup solution for Google Apps) and the momentum around that new product helped us raise a $4.5M Series A round that closed a couple of weeks ago.
We have been able to do an amazing amount in less than a year, which leads to tip number 6 for entrepreneurs – surround yourself with high quality people. When you hire, you look for the best person for the job. When you sell part of your company, you should do the same thing. If you can avoid it, don’t take money just for the money. Take money from people with a proven track record of winning so they can help you win. In my opinion, that is the value of presenting at Open Angel Forum. You get a chance to present to some of the best investors in the world and build a rockstar investor team to help you build a great company.
We raised almost $1M after Open Angel Forum, which led us to raising a larger Series A round on very good terms earlier than we originally planned. All in all, that trip to LA that I almost didn’t take led to $5.5M in new funding, a good return on investment by any standard.
TeamSnap, a presenter at our 
