Wednesday, May 16, 2007

the VC/ angel barrier question and answer

Every entrepreneur when he/she goes to a VC or an angel for a funding round is getting asked almost the same questions over and over again, one of the most hated one is: "What is your barrier? and why can't i take 3 programmers and copy your software?"
Every entrepreneur i know hates this question and a lot of them start loosing there temper over it.
I will try to give a few pointer from my POV what to say and more important what not to say to that question.
First what to say:
  1. If you really believe in it and it's true you can say that you are working on this software/web site/device for more then X years and only you have the knowledge to get it done. (this is the cocky answer, you have to beware of using it and need to back it up)
  2. An answer that is much better is: Been the first is what matter look at digg.com for example anyone can copy them but no one can get there popularity because they were the first social news site.
    Sure if google/yahoo/MS want to copy me they can and probaly they will do it faster but they don't have the users/costumers that I have.
what not to say is also very important
  1. don't say that google/MS/Yahoo are too slow, fat and stupid (because they are not)
  2. don't say you are the best! and that it (just because your mother told you that it doesn't mean it's true)
  3. don't tell that you have an unbelievable algorithm that no one can even start thinking about copying.(even if you have one be modest)
  4. don't say you are cheaper... never go into competition with a bigger company over price they can always out spend you.
that it please feel free to comment

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