Meet the Angels!
Last night I attended “Meet the Angels!” sponsored by MIT Enterprise Forum of the Northwest. This Venture Lab event was moderated by Rebecca Lovell, Chief Business Officer at Geek Wire. There were panelist from seven local angel investor organizations:
- Alliance of Angels
- Keiretsu Forum
- NW Energy Angels
- Puget Sound Venture Club
- Seraph Capital Forum
- ZINO Society
A description of each of these organizations and their representatives at the forum is included below.
The panelist were all given the opportunity to introduce their organizations and then took questions from what appeared to be nearly 200 attendees. Here are some of the takeaways I left with.
- Of the approximately 600 thousand businesses formed each year, only 5% receive angel investor funding and less than 0.5% receive venture capital funding.
Looking at the 5 angels that provided complete reporting (there is a spreadsheet below) deals were up 34% in 2011 over 2010 to 133, dollars invested were up 44% to $64.3 million and the average deal size was up 7% to $483 thousand.
- Based on very limited data, it appears that 20-25% of applicants make it to the screening process, about 50% of the ventures screened get to present and 50-67% of the presenters get funded. That would mean your chances of being funded by any given angel organization is around 5-8%.
99% of angels are not part of a group.
- The duration of the process can range from 3-6 months between presentation and funding.
The biggest variable is due diligence. You can manage that variable by being prepared. Get a due diligence check list from the angel or another source and make sure you have the information necessary and create a drop box for file sharing.
- The due diligence will cover:
- Do you have a sustainable competitive advantage
- Is you IP protected
- Corporate governance and other legal entity issues
- Management team
- Prototype Demo is the new PowerPoint
- Market traction
- High growth/high volume market
- With a long lead product, LOI with large customer
- Has to be people the angel can work with.
- Has to understand how to get the product to market
- All engineers, not a good team. – All family or all family and friends, not a good team.
- Can the team execute? All the nice words on the investor deck depend on this.
- Get a sales guy early.
- Owners should always feel the team is never good enough. Build a stronger team than you’re comfortable with.
- Know what you don’t know
- Recognize your mistakes early
- Inability to communicate
- Sloppy deck
- Build a stronger team than you’re comfortable with
- Don’t cut corners early on
- Look at the team’s core skill set, what can you do versus what you think you’re going to do
- Building companies is a team sport
- Clear vision, does it align with the team and investors
- Know what you don’t know
- Don’t quit your day job too soon