The fact that investors bring much-needed capital to start-ups is a given. The fact that investors can bring even more vital advice and business guidance to start-ups, however, is less well-known. But for Kevin Chang, 40, and Larry Mana'o, 39, of Detto Technologies Inc., a provider of data and customized settings migration technology, bringing in investors meant bringing in mentors to help grow their business.
The Bellevue, Washington, entrepreneurs made a first round of funding in 1999 and 2000, during which they sought traditional investments. Then in the second round, explains Mana'o, "We were looking for investors who [could provide] a more practical [approach] and a reality check in terms of the business."
During this second round of funding, the partners looked for angel investors with the right business experience. Jeffrey Wu of New Sea Equities LLC in Maspeth, New York, fit the bill. Wu had owned and operated businesses in the past and had recently invested in another technology company, so Chang and Mana'o knew they'd found both the investment and the business wisdom they sought.
Wu and Michael Yung, also from New Sea Equities, felt the connection as well-and invested in Detto in 2001. "[They] really got us to focus on the operational side of things," says Mana'o.
"When we came in," recalls Yung, "we [told Chang and Mana'o], 'Focus on what will get you your revenue first.'" While other businesses were spending all their time and money on fancy management teams and operations, Wu and Yung advised Detto Technologies' founders to focus on revenue and long-term sustainability instead.
The investment-cum-mentorship relationship between Detto Technologies and its investors has paid off-Chang and Mana'o estimate $5 million to $10 million in sales this year.