When my buddies and I almost got completely duped by a couple investors. 👇
It was 2016 and I was a senior in college. My two buddies and I got invited to pitch our startup idea at an accelerator.
We were excited! We thought this was our chance!
So we drove up to the big city all wearing black suits. We pitched our idea to a couple investors (Wearing jeans and t-shirts 🤣).
They hated it. 😕
(I don't even remember what our idea was)
But they said they really liked us as a team!
"Let's find a better idea that you guys can work on", they said.
So we started rattling off ideas. About 20 on the white board.
Then we went through talking about each. and limiting it down to two ideas.
Then together we picked one!
The idea was helping people sell the shirt off their back.
They'd give our service access to their facebook and instagram pictures.
We'd use machine learning to find the pictures where clothing items could easily be seen. (none of us knew how to do this)
And then it would automatically post them for other people to buy!
People could request to buy the shirt off their back. They could say no or give a price and make money with hardly any effort.
Great idea right!????
We thought so!
The investors said "Alright we will invest in you! I think you guys are a great team!"
"There is a 24 hour hackathon this Saturday where you can build the mvp".
We left their office, and walked through the hallway.
We told ourselves, "keep your cool. keep your cool!"
Once we got to the elevator...
We all cheered and jumped for joy! We thought we had hit the startup dream!
They are going to invest in us!?
We went to the hackathon, I built a little mvp.
The investors came by and said "That looks great!".
Later we discussed the terms.
They said, "We'll take 50% and give you $10,000 and you three can split the other 50%. You guys build the product and we'll use our "network" to help it grow."
They must be really good! I thought, all of their experience! Seems like they are taking a lot of equity but $10,000! (seemed like a lot to me as a kid). Thats like 6 months of ramen!
So we said yes and signed a pdf!
After 2 weeks I was starting to feel like this was a terrible arrangement. I was spending all my time building this product and what had they done?
So I called my step-aunts brother who was a multi-millionaire in Las Vegas renting out Ferraris and other super cars to ask him what he thought.
He said, "That is a terrible deal. I would not do that." 😳
So I told my buddies I'm out and then they walked away too.
I realized I was just a pawn in those investor's game. I have learned so much since then! 😅