The search engine can be used to find the correct investment groups for your funding needs and apply to them directly. You may have 3 active applications at once before being placed in the bulk submission folder. The engine is a free tool for entrepreneurs to use. Some groups charge a submission fee separate from Angelsoft.
When to use it
It’s always a good idea to apply to local investment groups. Before applying to a group directly, read their profile to make sure that you fit their investment criteria.
Promote tool
What is it?
The tool can be used to gain broad exposure over our network of 16,000 investors and 450 investment groups. This tool promotes your company in 3 ways:
1. Your company is posted to the Open Deals Investor Community, where investors can find you. They browse through posted deals, based on a variety of criteria such as industry, rating, and number of views.
2. Every two weeks, your company is e-mailed to investors in your area, and, if you are one of the 5 highest-rated companies in Open Deals, your company is included in an e-mail to all 16,000 investors.
3. Every time an investor looks at a company in Open Deals, it shows up on the dashboard of every logged-in investor in a live-activity feed. Investors spend over 2,000 hours per month looking at this feed.
The cost to promote your deal is $250 per month.
When to use it
If you’re seeking broad exposure for your deal or you’ve already applied to your local investment groups.
Promoting your deal does not allow you to exceed the 3-submission limit. The 3-submission limit is part of Investor Search Engine application guidelines, which are unrelated to the Promote tool.
We recommend that entrepreneurs promote their deal if they’re seeking broader exposure beyond the 3 applications that the Search Engine allows.
Steve Mock, the founder and CEO of GiftVenture, was recently interviewed on Frank Peters’s podcast. Giftventure is a new offering to make giving a gift to a child much more interesting. Steve applied to Vegas Valley Angels in Las Vegas through Angelsoft - since GiftVenture is located in Nevada. Frank Peters of Tech Coast Angels went to Las Vegas, saw this deal and brought it back to TCA in Los Angeles. The TCA members loved this deal so much, one said, “I want the best deals, I don’t care where they are from.”
This is a deal that would have otherwise been overlooked by TCA because the company is not located in Southern California - yet it turned out to be a perfect deal for their membership.
Angelsoft makes co-investing with other early-stage investment groups easy, wherever they may be located. VC’s, Angel Groups, and other groups across the globe are all using the power of this shared back end system to accelerate and find the best deals — period — and make sure that those deals are getting funded.
Frank Peters put it best: “I gained an insight into just what collaborating on deals via Angelsoft could mean to the future of angel investing.” The thinking now is as long as a trusted, local group has some skin in the game, groups from outside the region are more and more willing to participate. For the most part, an outside group will need a local group to run due diligence anyway. At Angelsoft, we are delighted that more groups are using our platform to connect and invest across a much wider region than ever before.
Paul Graham, the entrepreneur-turned-investor behind the ground-breaking YCombinator, has written what may be the most useful, unvarnished, searingly-honest essay on raising money for startups. It should be mandatory reading for every early stage company, and indeed is so good, and so true, that we’re considering making reading it a click-through pre-requisite for submitting a plan through Angelsoft.
His major points are that fundraising is hard, hard work that goes against just about everything that is inherent in being an entrepreneur. It takes longer, costs more, and is more fraught with difficulty than you could possibly imagine. Investors are indecisive, subject to peer pressure, and difficult to nail down.
The odds of getting funded are much, much more difficult than any entrepreneur realizes: Paul quotes David Hornik of VC August Capital as noting that the odds of his funding you are between 0.125% and 0.4%, which in our experience is absolutely typical for venture capital firms as a whole. The angel investing side is somewhat better, particularly for early stage deals, and our statistics here at Angelsoft (derived from tens of thousands of pitches delivered to over ten thousand investors) show that over the past several years organized angel groups have funded 1.32% of the deals that submit to them. But that still means the odds of your getting funded, even by an angel, are worse than a staggering 70:1 against.
Nevertheless, Paul’s essay provides excellent advice for both the mindset and actions that will give you the best chance of succeeding with your startup. In particular, pay close attention to the concept of ramen profitability. Get to there, and the world will seem an entirely different, and more hospitable, place.
BusinessWeek today published an article about angel investing during the credit crunch. The article offers insight into why angel investing has NOT slowed down during this economic climate but says it has changed - and then goes on to explain how it has changed.
“Two trends we’ve seen are: We’re investing in deals we’re already in and keeping them alive longer because conditions are not ripe for an exit,” said John May, founder of Washington-based Active Angel Investors. “We’re also giving more runway to portfolio companies. When times are tight, we want to overfund.”
The article also references some of Angelsoft’s new live early stage investing stats that can be seen HERE
Angelsoft 3.0 is Angelsoft’s most ambitious release ever. In this special release we aimed to better integrate all the bits and pieces of Angelsoft into one seamless web experience.
This release includes 569 improvements, of which 241 are bug fixes, 12 are new features, and 43 are user experience improvements. You can read the full release notes here. Below are the highlights:
GROUP TOOLS
Deal & Member Search - The search bar in the Group Deals list search will now search across ALL application data including business summary, answers to the questionnaire, management, etc. The search bar in the Group Members tab will now search across ALL data from the expanded member profiles including bio, investment interests, and more.
All Email Links Clickable - All links should now be “clickable” in all Angelsoft emails, regardless of your email program.
Bulk Submissions Protection - To help groups with the growing problem of bulk or “spam” entrepreneur submissions, we now label all deals submitted to more than 3 groups as ‘Bulk,’ and send them to a special Bulk folder under New Submissions. To take a deal out of Bulk, simply move it to another folder.
All Members Can Add New Deals - All group members can now add new deals using the same New Deal button that group administrators use. They can also use the New Submissions email.
Deal Guests Invitations - When inviting a guest to a deal, the invitation email now includes the name of the deal and a direct link to it.
Upcoming Events First - Upcoming Group Events are now sorted from nearest to latest, putting the next event first on the list.
Deal List Pagination - Groups with hundreds of deals will be happy to see the new pagination on the Deal List, which shows a max of 50 deals per page and allows for quicker loading and browsing.
Movable Dialog Boxes - Pop-up dialog boxes on the Deal Dashboard and elsewhere can now be moved to reveal the text underneath.
THE INVESTOR COMMUNITY
Search the Investor Community - Deals in the Investor Community can now be searched by keyword, just like Group Deals.
‘Most Referred’ on the Investor Community - Deals in the Investor Community can now be sorted by “Most Referred,” highlighting the deals that have received the most attention from other groups.
Deal Type Dropdown - You can now focus your Investor Community browsing on deals submitted by entrepreneurs, deals posted by Angel Groups, Incubators, VCs, etc. (This depends on the presence of these deals in the Investor Community .)
Investor Self-Accreditation - Members are now required to confirm their status as Accredited Investors, or as Group Administrators before they can access the Investor Community , keeping the Investor Community a secure space for accredited investors.
The Investor Community Referral Note - When referring a deal from the Investor Community into your group, members can now compose a quick note to group administrators, letting them know why this deal was referred.
PUBLIC WEBSITE INTEGRATION
New Top Navigation - The new Top Navigation bar integrates all Angelsoft resources into one seamless experience. Drop-down menus allow quick access to every tool on Angelsoft.
Group Finders - The new Group Finder tool allows entrepreneurs to quickly locate and target investment groups in their region or area of expertise and start an application. Accredited investors can also use the Group Finder to locate groups in their area and inquire about membership.
Logged Out Demo Pages - When logged out, the new public web site shows demo versions of the different tools, with explanations.
Industry Insights - Angelsoft’s position as the exclusive deal management tool to 400+ angel groups and VC’s gives us a unique perspective on the early-stage ecosystem. Our new Industry Insights page gives you a window into some of that activity.
Real Activity Map - Angelsoft’s home page now includes a live map of activity happening on Angelsoft in real-time. See it for yourself!
Unified Login - All users now have a unified login. Simply login on any page, and we’ll point you to the right tool set for you.
We hope you’ll love the new Angelsoft as much as we do. As always we are eagerly standing by to hear your feedback, requests, and suggestions.
One way to categorize businesses is growth businesses versus lifestyle businesses. Both are great for the US economy!
Growth Companies (build to sell)
Growth businesses often require professional investors and demonstrate that they can increase revenues and often number of employees rapidly. The pay-back to entrepreneurs is that they have the opportunity to build great value in their equity (stock ownership). The entrepreneurs and investors reap the benefits of their efforts by selling the company five to ten years after startup.
Angels (and VCs) invest in growth companies, which they often arbitrarily quantify as startup ventures that can grow revenues to $30 million (or more) per year in five years. These are the ventures that grow sufficiently rapidly to allow investors to harvest their financings (exit), usually by selling the company to a larger public company, within five to ten years. Because most such growth ventures fail (or are not highly successful), investors seek returns of 10X, 20X, 30X or even more over five to ten years, to justify the risk involved in investing in these startup ventures.
Lifestyle Companies (build to keep)
Lifestyle companies, on the other hand, tend to grow revenues slowly and may or may not need a substantial number of employees. As the company matures, lifestyle companies can become quite profitable, allowing the entrepreneur to earn a handsome income over as many years as the company thrives. The equity value of lifestyle companies is modest compared to growth companies because the smaller revenues and earnings of lifestyle companies equate to a lower valuation. But the potential salaries for entrepreneurs can be quite high and these high salaries can extend over decades, depending on the nature of the business.
In the end, lifestyle companies can produce very attractive salaries for entrepreneurs over many years. While, the primary motivation for growth company entrepreneurs is to harvest their investment of time and money thru the sale of the company in a limited period of time.
Of the estimated 500,000 new ventures started in the US every year, over 90% are lifestyle companies. If these entrepreneurs need outside capital to start these ventures, friends and family are their primary source. Entrepreneurs use these sources of capital and bootstrapping techniques to achieve positive cash flow. As the company matures, banks can provide the capital necessary for operations and growth. Less than 10% of new ventures annually qualify for investment by angels and VCs: about 25,000 new companies are funded annually in the US by angels and about 1000 new companies are funded by VCs.
This explanation is, by its nature, a generalization. Many growth companies have been started by bootstrap entrepreneurs and grown using internally generated cash (from earnings).
