The problem with not being able to find more TCA members willing to be deal leads probably has less to do with getting people to learn how to do due diligence and more to do with learning how to identify a good investment.

TCA doesn't help itself when it promotes the idea that that nobody can tell which investments will be successful and that it has more to do with luck. If that's the case, why would someone want to put their reputation on the line by recommending a deal?

The financial success of Stanford University Office of Technology Transfer shows us that it is not just luck. They invest in the more risky level of paying for the patents and limit their success by not paying for foreign patents. They do not fund companies. They hope that someone else will want to license the patent. Most of the patents are not picked up, yet they have been doing better financially then most Angels and VCs. I stated their numbers on a previous post.

Frank has previously stated that his success was just based on luck of being in the right place at the right time. We also see this in a lot people who have assumed leadership roles in angel and venture investing. They say they know what's what, but really they were just lucky, and that's why their advice hasn't been panning out for years either.

A lot of people rode the technology waves of the advents of the desktop computer and internet. These technologies created huge voids in the market with no competition. Consequently there were a lot of lucky people. But these people did not create the market and they did not have or gain the experience of trying to replace a competing product. The success Frank and the others had in their own businesses can't be repeated today, now that a lot of competition is firmly established.

What's needed now is people who understand product development and understand the competition of replacing existing competing products on the market. If one's investment fails because it is unable to replace the existing technology or existing way of doing business, then it is an investment that should never have been made. The only risk that should be accepted is if the new technology loses to another new technology, but not the risk of losing to the existing technology. The new technology should be good enough that it can't lose to existing methods.

It is not that difficult to evaluate the value to the end user of switching from what they use now to the new product being sold by the venture. Stanford University has been doing it successfully for decades at a more risky level. They do not have the impressive resumes of the VCs and many angel investors, yet they have been outperforming them for years.

Currently when TCA asks for deal leads they are just asking "who feels lucky?". Instead TCA should be promoting a standard formula that all companies that come out with new products follow. Currently the TCA applications for funding and applications for its competitions do not ask any of the pertinent questions because the TCA members who have been lucky in the past insist that they just know a good investment when they see it. The questions should be specific regarding value and cost to the end user as compared to the competition.

I've never heard of the Stanford University Office of Technology Transfer holding a fast pitch competition. When Frank was interviewing other successful Angel groups, none of them talked about a fast pitch competition. In TCA, entertainment is considered very important and given a high priority. Instead of relying on guest speakers and entertainers, TCA insists on using opportunities to create a good show rather than a show of good opportunities. Then it wonders why it can't get more of its members to act as deal leads.

When considering becoming a deal lead, TCA members probably don't know if they are going to be judged on their ability to create an entertaining show or their ability to identify a good investment. It is very ironic when considering how many TCA members have been successful business owners. Certainly they would not have chosen managers for their businesses based on the person's ability to be entertaining.

Saying you need more members to act as deal leads is the same thing as saying good deals are getting away from you. How about naming some of the good investments that have gotten away?