In their latest post the Soshi Games chaps relate their experiences of video conferencing with potential investors. It sounds like they had a positive experience but prompted the question would an angel investor part with their cash purely on the basis of video conference meetings.
Angel investors certainly have the ability to be idiosyncratic so I would not dismiss the notion of them investing via this route. I suspect it ultimately depend on what their key driver for investing is e.g. your operating in their 'pet' sector, they are merely seeking the tax shelter etc.
Institutional investors however are very much a different breed...
In general terms a golden rule of investment remains 'management, management, management'. It is a well trodden path that good management can turn a bad business round in the same way that bad management can ruin a good business. People invest in people. As such I would be surprised if any institutional investor would invest without the proper face to face interaction to be able to make a personal judgement on the individuals behind a business.
Video and web conferencing is however becoming more and more common place, and with the technology improving rapidly could be a good way to progress to a later stage in the investment process before a face to face meeting. Would reduce car or air miles too! We see this approach a lot with our portfolio companies where Webex is increasingly being used in the earlier stages of the sales process prior to face to face meetings.
Technology always moves the world on and so I am sure it will only be a matter of time before an investor fully embraces this approach and proves me wrong!
Post investment is a bit of a different matter though. It becomes a bit more difficult to have valuable interaction between investor and investee via video conference. This is important because, although over quoted, it is true that good investors provide more than just money. The ability to be able to meet with them over coffee to discuss strategy or sales opportunities in an unscheduled informal manner is often invaluable.
So - video conferencing good or bad? Anything that helps widen access to finance for small and growing businesses can only be a good thing.
Comments
Your comments make perfect sense. I would add, however, that as a way to increase potential deal flow, this method does enable geographically-remote entrepreneurs and investors to at least establish whether there is the potential to do something together. Most of the guys we spoke to (all from Keiretsu Forum) were in Paris and San Francisco. It is certainly questionable whether we would have had that 'face to face' opportunity without the high-def conferencing tools being available. I do take the point however that eventually, people need to meet people to do a deal.