Passion a crucial ingredient for success

During Global Entrepreneurship Week, BusinessDay puts questions to Wellington entrepreneurs and angel investors. Today: Dave Moskovitz.

DAVE MOSKOVITZ chairs start-up investment group WebFund, a member of Wellington investor network Angel HQ, and blogs on investment at nzangels.com. He talks about a business from an investor's perspective.

What makes you sit up and pay attention to a business?

A small, focused team with passion, pragmatism, experience, empathy and charisma who are throwing everything they've got at realising their dream.

Are there any turnoffs that will ruin any chance of striking a deal?

Lack of international scalability, not having done your homework, inability to be coached or be a team player, not being completely honest and transparent, trying to get investment to pay yourself a salary, having grossly unrealistic expectations of what your idea is worth.

What ownership structure do you ideally want from a business?

We like our entrepreneurs to hold the majority shareholding; we typically look at a 25-45 per cent stake, either by ourselves or in syndication with other angels.

What is the ideal stage for a start-up to look for capital?

Right at the beginning, even before pen has been put to paper - you can avoid a lot of pain later by involving investors with the appropriate experience and contacts from the get-go. Even if you don't need their cash or experience straight away, you'll want a warm relationship already in place when you do need it.

What is the most important thing an entrepreneur should ask of an investor?

What can you commit to doing for this business other than providing cash?

How can entrepreneurs get a realistic idea about what their idea is worth?

Valuations are subjective, and it takes someone with significant expertise to even hazard a guess. That's one of the reasons angel investors like to syndicate deals - no-one is an expert in every domain. Your company becomes a lot more valuable the day you sign on your first batch of significant customers, and is worth more again the day you become cashflow positive.