Last week I was talking to a software engineer from out of town that was looking to join an idea stage startup in his city. With three options on the table, he had a good idea of the pros and cons of each while still wanting a sounding board. I asked him to go through each of the startups he was considering, including the ideas and the founders behind them.
The first idea was OK but sounded like a feature instead of a product. The second idea was much better than the first and sounded promising. It was when he got to the third startup that I had to stop him and clarify: it was two first-time entrepreneurs that had raised an angel round without a product idea. Imagine pitching investors with lines like “don’t worry about our product idea, invest in us and we’ll be successful.”
Now, it’s one thing to get friends, families, and fools to invest in a hair-brained scheme that you’re super passionate about. It’s a whole different animal to get people to write checks for your startup that has a name, but no product idea. As a software engineer looking for my next opportunity, I’d evaluate the business idea almost as much as I’d evaluate the people. Ideas are readily available and do matter.
What else? What are your thoughts on first-time entrepreneurs raising angel money for a startup with no product idea?
David Cummings on Startups 
Reblogged this on Bag Lady Boutique.
Interesting comparison. What do you do with programs like Y Combinator that are putting a heavier (even primary) emphasis on the founders versus the idea?
http://ycombinator.com/noidea.html
Cam Lanier, the hugely successful entrepreneur from West Point, Georgia (MindSpring, PowerTel, Headhunter.com, etc.) has often said that he “bets more on the jockey, than the horse”. Similarly, it sure looks like the VC’s invest in proven entrepreneurs and seldom, if ever, invest in the unproven ones.
I have a few questions – how is it possible to raise money without an idea? It seems quite impossible.
But still, team does matter. Without a team the idea is nothing. Execution goes first.