# Investors Are Too Scared
Source: https://www.yegor256.com/2015/12/16/investors-are-too-scared.html
We're starting a new thing, a seed fund. Its name is
[SeedRamp](https://www.seedramp.com). The formula is simple: You schedule
an interview, we have a one-hour conversation, you present me your
startup idea, and we either give you cash right away or explain why we don't
feel like it. We don't do any due diligence or background checks. The decision
is made [right there]({% pst 2023/aug/2023-08-15-decision-making-process %}).
It's something similar to angel investment, but the
amount is smaller---less than _$20K_, and decisions are faster.
{% jb_picture_body %}
There are basically three problems we're trying to solve with this
new idea: 1) Investors are _cowards_, 2) investors are _cowards_, and
3) investors are _cowards_. Here is why.
## They Are Afraid of Strangers
It's no secret that Silicon Valley is very "_corrupted_" territory,
where in order to get access to money people, you must know some other
money people or someone who knows someone, etc. You must be _well-connected_
in order to be successful. You simply can't raise money just by having an
awesome idea or even a great implementation. You need connections.
I think that's disgusting.
I am, in general, a big fan of _meritocracy_, where those who are smarter
or stronger win the most. This is the principle we,
at [Zerocracy](https://www.zerocracy.com), apply to software developers who come to us.
I explained it last year in this rather popular and provocative post:
[How Much Do You Cost?]({% pst 2014/oct/2014-10-29-how-much-do-you-cost %}).
We simply don't care how many years of experience you have,
how much time you've spent with your previous employer,
or how many programming languages you know. We only care about your
objective achievements, which are validated by the market. And, of course,
we don't pay attention to any references or any previous relationships.
{% quote We simply don't care how many years of experience you have %}
I strongly believe this is how it should be.
Unfortunately, this is not how it is in Silicon Valley when a young
startup is looking for $100K to $150K of seed money. Angel investors are difficult
to reach. They are afraid of you, if you come out of nowhere. They only want
to talk to someone they can _complain_ about to their friends. This
basically encourages startup founders to spend their time on friend-making
activities instead of business-making ones. Very often, good teams simply
_miss_ their chance.
## They Are Afraid of Telling the Truth
Have you ever talked to a venture capital firm? To angel investors? To
any investors, basically? If you have, you'd know they all
are very _polite_, nodding their heads and smiling while listening
to your
[pitch]({% pst 2016/mar/2016-03-28-unspoken-secrets-of-elevator-pitch %}).
They usually are "very excited" to meet you and
"learn more" about your business.
In the end, they don't give you the money.
Why? Who knows. They won't tell you. They are cowards, and they are afraid
of telling you that your idea sucks and your business plan is totally wrong.
They are afraid of being _honest_.
{% quote They are afraid of telling you that your idea sucks %}
There is an almost identical situation with recruitment. You send your
[resume]({% pst 2016/mar/2016-03-08-pimp-up-your-resume %})
to Facebook, they interview you, and you spend a few hours with them, answering
their questions. In the end, they email you, saying "We decided not to proceed
any further; good luck in your job search." They are afraid of telling you
the _truth_.
And it's disgusting.
In our recruitment process at [Zerocracy](https://www.zerocracy.com), we do
exactly the opposite. You apply to us, we ask one of our programmers to
[interview]({% pst 2016/mar/2016-03-01-how-we-interview-programmers %})
you, and then, when finished, we make a decision about whether you're
a good candidate or not. We discuss your profile right in front of you. We
don't have any discussions without you. We make our decision fully disclosing
our reasoning to you. This is how it should be everywhere, I believe.
Especially with regard to investments.
## They are Afraid of Losses
It's a very infamous problem, mentioned everywhere there's a list
of "top 10 reasons for startup failures." Investors simply turn you
into an _employee_. Before you get their money, you're on your own. You make
your own decisions, you manage your business, you're in charge.
Then, you get the money. It doesn't mean you're _rich_. Not at all. It means
that, from now on, you're their employee. They decide what your salary is.
They decide whether you can rent this office or not. They decide what
car you can afford.
Keep in mind that your salary is lower than your friends are getting,
working somewhere on Facebook. Your salary is low, and you can't change it.
All your expenses have to be approved. You're simply under the full control
of your _board_.
{% quote They are trying to win in poker by always making small bets %}
Why is that? Because they are afraid of you being _free_. They are afraid
of losing their money. That's why they are doing everything they can
to keep a close eye on you.
It's disgusting and very counter-productive.
It's similar to trying to win in poker by always making small bets. In most
cases, they lose their money, you lose your time, and the market loses the opportunity
to get a new product.
## We Are Not Cowards
{% badge https://www.seedramp.com/images/logo.svg 128 https://www.seedramp.com %}
[SeedRamp](https://www.seedramp.com) is going to solve all of these three problems.
First of all, we completely remove the necessity to have any connections
in order to reach us. You need money? Just _schedule_ an appointment online.
We don't care who you are, where you're coming from, or who you know. We
give you one hour of our time, and if we reject your idea, you can apply again in
a month. Thus, any young startup without any friends or connections is
_welcome_. Just bring your strategy, your existing results, and your passion, and
we'll talk.
Second, we don't say, "We will call you back." We give you our reasons right
away, and we always tell the truth. Moreover, we record our interview and
publish it on _YouTube_. Yes, that's not a joke; we will publish all interviews
online, and you can see how we talk about other startups. We are not afraid of
telling the truth; it's part of our marketing strategy.
Third, we don't sit on your board after the investment is made. We simply
give you a check, and you can fly to Vegas the next day and spend all of that
money there. We don't care. When our decision is made, we don't tell you
what to do with the money. If we gave you the money, we believed in you
and your judgment. If you think that the best use of this money would
be a new _Kawasaki_, do it.
## Instant Micro Investments
To make it all happen, we have a few principles and limitations.
First, we expect you to ask for enough cash for one calendar month. You simply
have to explain to us how much you need for one month and how you're planning
to spend this money, approximately. One calendar month. We expect you
to come back to us in a month, demonstrate your progress, and ask for one
more month. Of course, we may say no.
Second, the maximum we can give you is $20,000. Maybe, in the future,
we will raise this limit. For now, it is $20K.
And one last thing. We will ask you to give us some
[future equity]({% pst 2016/may/2016-05-17-convertible-notes %})
in your startup. You decide how much, but it has to be enough to make us
interested. It all depends on your situation. A few percent, I'd guess.
We were planning to host our first interviews in the middle of January 2016.