By Adam Foldenauer

People, not business plans, are the most important ingredient for a fruitful pursuit of startup capital.

Of the advice offered by last night’s panel on attracting and managing investment funding, much of it centered on building and presenting a team investors will believe in, and in leveraging relationships. Work It, Richmond organized the panel discussion and networking event at the headquarters of SnagaJob.

Thomas Eide is the CEO of PaidThx, a startup that is a few months away from launching tools that will enable mobile money exchange. He said, “Put together a team. That’s the first thing you need to do. Yes, investors want to believe in your plan, but they need to believe in you and your team first.”

What about marketplace assessments, return-on-investment scenarios? Do the classic components of a business plan get scrutinized by angel investors?

“It’s all about the person, and less about the plan,” panelist Keith Middleton said. Middleton is co-founder of Fahrenheit Finance. “Now we work with a lot of early-stage companies, and you have to have those forecasts to show that you know what you’re doing, but not too many people will read them.

Keith Middleton

They care about the person. It’s about the investors getting comfortable with you and what you are going to do with their money.”

The business plan is still a critical component in the fundraising process, if not for potential investors, for the entrepreneur himself. Michael Bor, founder of CarLotz, took a by-the-book approach to launching his firm and seeking capital. Leveraging his business school training, he sequestered himself in his basement and emerged with an 80-page document.

“A lot of my friends in the tech space said, ‘Don’t worry about a business plan, no one reads it anyway,’ and it was true, no one read it,” Bor said. “But I read it. It was very helpful to me. The process I went through enabled me to never go into a meeting and have someone ask me a question I didn’t know the answer to.”

Mike Bor

A topic that engaged attendees was where to find investors. One attendee got a laugh by posing the question, “Where’s the angel investor store?” Again, the conversation turned back to relationships.

Eide said, “Investors are on our Facebook, our LinkedIn, every family gathering, and every relationship you ever had. It’s us. We know these people, we’re in sports leagues with them, we go to church with them. They are making investment decisions in you, in your relationship.”

Middleton’s pursuit of seed funding was unusually serendipitous. During his transition out of Performance Food Group (he was controller there), his resume was passed to an influential Richmond entrepreneur and investor, Karen Booth Adams.  She connected with Middleton and his business partner, Rich Reinecke, and formed the business. Adams was partner until earlier this year, when Middleton and Reinecke bought her ownership stake.

CarLotz has more than 10 investors, all common shareholders. Bor built his group of investors one at a time, and discovered them through a step-by-step networking process. He went from someone new to the used car space and new to small business, to a business owner who had the luxury of turning away potential investors in his latest funding round.

“I had a lot of coffee meetings. I was way over-caffeinated during that time,” Bor said. “It was a ladder of relationship upon relationship. Each meeting would lead to five more meetings. I’d have coffee and a potential investor would tell me about someone in the auto industry, who would tell me about someone else, and on and on.”

As part of the discussion, Eide talked about showcasing his team’s entrepreneurial “hustle” – showing potential investors the company’s passion and tenacity to build a great product and do whatever it takes to succeed in the dynamic, hyper-competitive market that is mobile technology.

The PaidThx leadership team. L-R: CEO Thomas Eide, Vice President of Experience Ryan Ricigliano, Chief Technology Officer James Rhodes, Executive Director of Finance Hugo Camacho, COO Rob Kirchner.