Know that a rejection is not a startup judgment: angel investor Randy Domolky

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Ryan Sysko has certainly stretched the confines of traditional angel investing.
Since founding health IT startup WellDoc in 2005, Sysko has raised roughly $30 million from local angel investors, and his startup — WellDoc helps doctors manage patients’ Type II diabetes via mobile phone — is now on the brink of closing its first round of institutional funding.
The money, as Sysko told an audience at the 3rd annual Entrepreneur Expo, has helped WellDoc become a company with 90 employees in both Baltimore and Bangalore, India. But pulling in that first $1 million of angel funding wasn’t easy.
On Tuesday, Sysko recreated the experience of his first pitch, given at a time when WellDoc had no business plan, no clue how to make its mobile health tech pay for itself and only a prototype of what would become its mobile health platform. Today that platform is a Class II medical device approved by the Food and Drug Administration.

Using the slides from WellDoc’s 2005 pitch deck, Sysko made a faux attempt to raise funding from Randy Domolky, managing director of TEDCO Capital Partners, the venture arm of the host of Tuesday’s expo, the Maryland Technology Development Corporation.
Interestingly enough, Domolky didn’t bite (he joked that Sysko ought to give him a call in a few years), but he did offer a handful of pointers to the entrepreneurs in attendance to consider during their next pitching meeting with an angel investor:

• A rejection is not a judgment call. Angel investors have to make sure a startup fits within their portfolio of companies they’ve already committed dollars toward. If they say no to your startup, that doesn’t necessarily mean your business is a bad idea.
• Quality, not quantity. “Know from the most knowledgeable senior people in your industry what the reaction is” to your product or service, Domolky said. “The higher quality people you get involved,” he said, “the easier it’ll be to get the next round” of funding.
• Edit yourself. A pitch to an angel investor isn’t about cramming all the information about your startup into the space of one meeting. “I want to get comfortable with knowing that when I’m not there, you’re making the right decisions,” said Domolky. That means time spent explaining how you approach problems, and what you’ve accomplished in the past, can pay dividends.

As for TEDCO Capital Partners’ general approach, Domolky said he’s “probably not the guy” who’s going to lead a round of funding.
“We would normally like to invest in a company that’s a bit further along,” he said. That means a startup showing some demonstrable revenue in its given market, as well as funding from other angels who have knowledge of a startup’s market — in WellDoc’s case, angel investors with backgrounds in software and medical device IT.
Sysko mentioned that over the course of four years beginning in 2005, between 30 and 40 angel investors funded WellDoc. The first money in, taken in 2005, came from a wealthy patient of Sysko’s sister. Having had diabetes for 10 years, he used WellDoc for 60 days, liked the result, and wrote a check for $1 million.