Crowdfunding the creation of the next version of LFGSS

One of the investors I met at the Seedrs thing suggested we'd cheated by bringing in our own investors rather than relying on the ones that Seedrs provided. I wouldn't regard it as cheating, I'd rather have investors that know me already and are aware of the product idea and track record.

It was an interesting evening though. I spoke to another investor who was a farmer and was not equipped at all for determining which were the good companies and which were the bad.

I tried to explain it for him... these are your 5% high risk investments, everything else should be in stable and safe investments. But with the 5% you should either go with your heart and something you believe in, or attempt to seek out the black swan company ( http://en.wikipedia.org/wiki/Black_swan_theory - the super massive company that is obvious in hindsight, such as Dropbox, Facebook, etc).

There are at least a few things that can help identify potential black swans by ruling out the ones that could never achieve it by asking a few simple questions:

• Are there constraints that limit the company growth? Such as headcount and space for a hair salon, physical land for a farmer, etc.
  
• Does the revenue grow in-line with growth of usage?
  
• Is the potential market measured in hundreds of millions?
  
  

If the answers are No, Yes, and Yes... then you might have a company that could potentially be a black swan event and go super-massive. But if a company is going for "We want to be the fine dining of meals on wheels in Cheshire", then avoid investing on an economic basis as you'll never get a great return on it.

I thought that asking people to invest from here meant that I'd exposed myself to many naive investors. But that isn't really the case, you're all very skilled at pooling your learning and discussing things. So you've by and large managed to educate yourselves rapidly. What I saw at the Seedrs event was a mix of extremely experienced investors (most of whom were kicking themselves for not getting a slice of Microcosm) and then a load of extremely inexperienced and naive investors (who I felt were going to lose their money if they weren't able to learn quickly).

I also felt at the Seedrs event that the entrepreneur mix was similar. A few good ones (in the minority) and a load of bad ones (who seemed to just like the idea of being an entrepreneur and perhaps picked their company idea out of a hat or by playing a game of exquisite corpse ( http://en.wikipedia.org/wiki/Exquisite_corpse ).

I did really like the Oyster card for desk space thing. His valuation was a bit nuts, but the idea is quite sound. I also did not like that they left the event early to have a celebration party for raising funds... I felt receiving investment was a responsibility and my best response was to knuckle down, not to drink it down. But it's a damn good idea, even if he just managed to get spare office space around the transport hubs solved for the "I've got a couple of hours to kill" crowd it would work quite well. But it all comes down to how well he can convince the landlords of empty offices to grant him the space on short leases, and who knows how his company survives an up-turn in which office space is less available and more expensive.

Anyhow... rambling now.
Interesting thoughts DK. I really enjoyed the link of Taleb's Black Swan theory to companies like Facebook and Dropbox. I never thought of it in the reverse. Something worth reviewing.