In this release we are welcoming VCs into the Angelsoft network, with a few new features that will make life a lot easier for them. But angels too have a lot to be excited about: We’ve improved some key areas of the program, including adding new deals, customizing industries, and inviting entrepreneurs to collaborate.
All in all we’ve had 317 updates, among them 194 were general bug fixes, 4 were new features, and 29 were smaller improvements. You can see all of them here. The highlights are below:
NEW VC FEATURES
For our venture capital users, these power features could help streamline the process:
Submit Directly to a Partner - You can now require the entrepreneur to select one of your fund’s partners, who will automatically be notified and become deal lead.
Track Deal Status - Deal Status notes, always at the top of the deal dashboard, are a new way to track the status of each deal. Only deal leads and admins may create them.
Printed Progress Report - From the Deal List, select any number of deals and click Actions -> Print Weekly Report. You will get a printed version of a report containing all the deals, their last Status Note, 3 last activity feed items, and general information about the deal, its stage, the deal lead, etc.
NEW ANGEL FEATURES
Quickly Adding Deals - Investors and Administrators can now quickly create a deal without going through the full application form. Create New Deal will open a dialog where you can add a deal by merely its name, or add the entrepreneur information and invite them to collaborate!
Smart Email Drop-box - Emailing-in deals just got smarter. You or your members may add a Deal Lead directly from the email by adding ::lead@email.com to the subject line - which will give that user admin privilege and Deal Lead status.
Better Industries - We’ve added some default industries to our list, including Clean Technology, Education, Gaming, Internet/Web Services, Mobile, and Nanotechnology.
Administrator Unsubscribe - Administrators can now unsubscribe from deal messages if they have no interest in them. Simply go to your Profile, and click Edit Preferences, then uncheck All Deal Emails.
Invite Entrepreneur Template - When inviting an entrepreneur to fill out the application, you can now use a saved template that you can change under Group Preferences.
Whether VC or Angel Investor, your feedback is very important to us. So please let us know what you think! Requests, suggestions, or questions are all welcome. Simply comment below.
At Angelsoft we spend most of our time making sure we are doing everything possible to build tools that serve both Entrepreneurs and Investors. It’s a tough balancing act because the needs of both often conflict. The one thing I’ve heard most from entrepreneurs lately is that they need the plans submitted to Open Deals to be better promoted to our 17,000 investors.
We took steps to help them out which resulted in a doubling of the number of views that Open Deals subscriptions receive. The feedback from our Investors has been positive as well. Making both side of the equation happy is central to our product decisions and we think we succeeded with these new features.
To take advantage of these new features you can post your deal to Open Deals where it will be accessible to the 17,000 investors that use Angelsoft. Screenshots
Investor Community live deal-feed added to the Investor dashboard
The right side of the investor dashboard is a live feed of the closest deals to that investor. The dashboard is the entry point of every investor into Angelsoft. The middle section of the dashboard displays updates on all Open Deals they are interested in. Screenshot
Investors now receive an email every 2 weeks with the 5 closest and 5 highest rated deals
It is a lot to ask investors to go seek out entrepreneur plans. Now we email the investors in our system every two weeks with a simple email informing them of the 5 closest deals to them and the 5 highest rated during the previous two weeks. Our first email went out before Thanksgiving and received tremendous response. Screenshot
Entrepreneurs now receive more feedback from investors. Investors can easily leave you feedback in the form of a rating or written feedback. You can see ratings and respond to feedback on your Application Manager. Learn more on our blog here and here
This is a major step forward in improving the funding process for entrepreneurs. Spend some time with these new features and leave comments with any feedback that you have.
Last week we conducted a survey that asked our Angel Investors how they felt about exposing more information about themselves on our Angel Investor Directory. The idea was to help our 450 Angel groups network more effectively and to help entrepreneurs make intelligent choices about whom to apply to for startup funding.
We wanted to get a sense of how valuable this information would be to entrepreneurs, so we reached out to them to tell us their thoughts on the new Group Profile we are building.
You can see our current wireframe below:
(click to expand to full-size)
The results were a little more expected than our Investor survey, with 95% of the the entrepreneurs responding claiming that the information would be valuable to them.
You can take the original survey here and see the results here.
With both Investors and Entrepreneurs in near perfect agreement, we are excited to move forward with the feature. We should be releasing it to Investors by the end of January, allowing them time to fill out the Group Description and Investment Criteria sections appropriately. The feature will be visible to entrepreneurs towards the end of February.
Angelsoft is NOT a matching site. The main difference between Angelsoft and the myriad of “matching sites” on the internet is thatAngelsoft is at its core a deal-flow management tool used by investment organizations every day to do deals - their private deal flow. When you apply to the Investment Community, you are placing your plan directly into a directory in the software that is accessible to all 12,000+ investors. The investment organizations can then click a single button and pull your deal directly into the fold of all of the other deals that they are working on in their pipeline.
But all of these on-line funding exchanges and matching sites claim to bring me to investors, too!
Because 600,000 companies are year are founded in the United States alone and many of them seek outside funding, there are many, many web sites that take aim at this lucrative market and purport to introduce entrepreneurs to investors. The sad fact, however, is that while it’s very easy for a site to sign up thousands of entrepreneurs (who want the money), it’s virtually impossible for them to sign up investors (who have the money.) That’s why none of these sites can legitimately point to their track record for getting entrepreneurs funded (despite any claims to the contrary). Instead, they make their money in one of three ways: selling you as a lead to service providers, selling advertising against your page views as you chat with other entrepreneurs, or charging you listing fees and then up-selling and re-selling you when you don’t get funded.
In contrast, Angelsoft started at the other end. Because it is the unbiased, internal platform used by investment groups, Angelsoft started with the investors. We have formed personal relationships with the general managers of each angel group and venture fund that uses our platform. We know them by name, and speak to them regularly. Their feedback has allowed us to build a system that manages over 2,700 new submissions a month from entrepreneurs and receives many thousands of logins each week from accredited investors (you can see the live statistics for yourself, at http://www.angelsoft.net/industry).
Now, with the Angelsoft Investor Community, you can post your business information in one place, and let investors find you, because they are interested in your company. This is better for you, and better for them. Angelsoft’s corporate mission statement is “more smart money into more good deals”.
Is Angelsoft’s Investor Community appropriate for any kind of investment opportunity?
No. It really isn’t. All those myriad other sites will tell you whatever you want to hear, and hope that you’ll sign up with them, because they are based simply on quantity. In our case, since our primary constituency is the investors, it doesn’t do us—or them—any good to have them wade through hundreds of deals that no one would ever fund. Therefore, this is not the right place for multi-level marketing deals, work-at-home businesses, real estate investment opportunities, film financing deals, local service businesses, franchise opportunities, or other similar lifestyle or financial investment ventures. There is nothing wrong with any of these, it is simply that they are not the types of businesses that have traditionally received funding from angel investors or venture capital firms.
Instead, the kind of businesses that serious angels and VCs seek to invest in tend to have the following characteristics: relatively low capital needs; high scalability; strong management; a unique selling point; a clear potential exit for cash within 5-7 years; and above all, a complete, well-thought-out business plan.
The National Angel Organization - the association of angel groups in Canada has some very interesting summits coming up in the next few months. Our neighbors to the North are vigilant users of Angelsoft and its very exciting to see how they have and continue to use all the features of Angelsoft to promote entrepreneurshp all across Canada.
The first event is the NAO annual summit. The summit will bring together angels from all across Canada and the United States. It will be help in Halifax from October 15-17. (http://2008summit.eventbrite.com/) Angelsoft will be hosting an Angelsoft Lounge all throughout the summit for angels and angel group managers to wander in and out of to get demos and other information on Angelsoft. We hope to see everyone there.
The second event is the Co-investment Summit (http://coinsummit.eventbrite.com/). This event is focused on assisting angel groups in getting co-investment funds for exciting companies that are already getting funded by one or more groups. These companies will use this forum to present their companies to the entire community of angels and generate interest to finish out the rounds for the entrepreneurs. Since most of Canada and the United States’ Angel groups use Angelsoft to manage their everyday deal-flow, sharing the deals among the groups is as simple as a single click. The process as defined by the NAO:
We would encourage all angels to attend these exciting events. Angelsoft is proud to be such an important part of both events.
When we launched Angelsoft 3.0 at the beginning of September, there was a lot of talk about our new homepage. Hank Williams said our dynamic map of live VC and Angel Investors activity was one of the coolest homepages he’s ever seen. Fred Wilson commented on the value of our homepage, particularly the Angel Investor industry stats.
For entrepreneurs, displaying traction to both investors and customers is a key component to success. User numbers are important, but displaying engagement will drive funding and sign-ups.
We feel that the Angelsoft activity map is great way to show transparency into our worldwide network. Not only does it give users an idea of the scale of Angelsoft, it displays how active that network is.
Facebook recently re-launched their website and it looks like they are thinking along the same lines. Their map isn’t dynamic, but i wouldn’t be surprised if that changes soon.
Recently, in the flurry of the Angelsoft 3.0 launch, Fred Wilson wrote a lengthy, thoughtful, and generally positive post about the platform in his blog A VC. One of his readers, writing under the nom-de-blog of T. R. Teller, wrote a pretty harsh attack on either the platform or the whole concept of angel investing (it was a bit hard to tell the precise target of his ire).
In the interest of responding to, and clarifying, some of the points he raised, I answered his post in some detail. Fred has suggested that my response was worthy of a full blog post on the Angelsoft blog itself, so here is what I wrote:
T.R, let’s try to look at this calmly, since we are all ultimately on the same side here, trying, as I wrote in Angelsoft’s mission statement, “to get more smart money into more good deals.” I clearly understand your frustration with the challenges of getting early stage companies funded, but let me try to respond specifically to each of the points that you’ve made:
Oh, I’m sure that more than 98.7% of the deals presented to you are “unfundable.”
The essence of a free market economy is that sellers may offer anything they want for sale, at any price the feel is appropriate, and buyers may buy, or not, anything that is offered for sale at a price THEY feel is appropriate. In a free market with perfect information, if no buyer is willing to purchase something on offer, then by definition the price is “too high”. The inverse is that if there are ready buyers but not enough product, someone will step in and offer products until the market clears.
Historically, the angel funding ‘market’ has been highly IMperfect. I’ve likened it to an investor and an entrepreneur running around a football field in the middle of the night wearing dark sunglasses and earmuffs trying to find each other. With Angelsoft, for the first time we have actually managed to create a more perfect market: there are over 11,000 accredited investors who are taking the time to participate in angel investment groups precisely because the WANT to invest. Why else would they be here? At the same time, with the Angelsoft ‘Community’ we have provided a way for an entrepreneur to place his or her plan, completely with summary, video, et al, directly in front of these investors.
Logic, and the theory of free market economics, say that if 11,000 willing buyers can look at the presentation of a plan and decide not to invest…yes, it probably IS “unfundable by objective, economically-motivated angel investors”. (Note that it may still be fundable by friends and family members, or by strategic investors, all of whom are motivated by something other than pure, stand-alone risk/reward economics.) Bill Payne (one of the most respected angels in the country, and an Entrepreneur in Residence at the Kauffman Foundation for many years), has written a good post on what kind of things make a deal ‘fundable’.
My guess, in fact, is that a full 100% of deals that come your way are, strictly speaking, “unfundable.”
Not at all! I have personally invested so far in two deals that I found through the Angelsoft Community, and have brought half a dozen others in for screening to the angel group to which I belong.
One of the things that is not intuitive at all is how the economics of angel investing work. While most entrepreneurs wouldn’t begrudge an investor an annualized return of, say, 25% on his or her invested capital, given the risk of early stage investment, the surprising, and probably terrifying, fact is that in order to achieve that kind of return, angels need to target getting back 30 times their money on each deal! While I’m sure that seems virtually sociopathic, I’ve written an explanation of angel economics that may prove helpful in understanding it.
I mean, why would an entrepreneur with a demonstrably fundable idea go to some wannabe angel network for small change, especially when you’re wasting 99% of your time saying “No Thanks” to the 99% of crap your nervous-nelly network of near-anonymous plungers has deemed “unfundable.”
It is a question of supply and demand, and what other options are available. If an entrepreneur can personally fund his or her idea, then there’s no need to seek angel funding. Likewise if he or she has a well-heeled family or circle of friends who are willing to provide financing. But if the idea requires outside financing, things get quite a bit tougher. Banks are not in the risk-taking business, and will simply not provide startup financing. Venture capitalists fund an even smaller percentage of companies seeking funds (MUCH smaller: last year, VCs in the US funded about 1200 startup and early stage companies; angels funded about 50,000).
So the question of “demonstrably fundable” may not be quite as clear-cut as it may appear on the surface. If no professional (or semi-professional) investor, having seen the proposal, is willing to fund it, I think that in a free market one would then have a hard time describing the plan as “demonstrably fundable”. I think it’s pretty hard to describe investors as “nervous nellies” unless you compare them to something else. I’m assuming that you would not invest your own money in a “hot prospect” from Nigeria that arrived via email, so would that make you yourself a “nervous nelly”, compared to someone who was naive enough to do so?
As for the “near-anonymous” comment, that is a function of each angel group. My own group, New York Angels, proudly lists our members on our website (including folks like Esther Dyson, Gideon Gartner, Josh Kopelman, and other well-known investors), as do many other groups.
I mean, if you want to throw figures at me showing how you’re investing millions and closing a dozen deals EVERY WEEK, then I might admit your method is interesting. Then I might admit your group isn’t a bunch of total posers.
I’m a little confused by this one. How on earth could anyone, angel or vc, possibly look at enough deals, or do enough careful due diligence, to close a dozen deals a week?? I don’t know of anyone or any entity in the history of investing that has had that kind of bandwidth. Our own group, New York Angels, has invested about $35 million during the past six years, and closed about fifteen deals this past year. I, personally, have invested in over 70 startup companies so far. I think it would be pushing things to call us ‘posers’.
I mean, please do let me and everyone know if that’s the case — you’ll likely see higher quality entrepeneurs try their luck with your screwball process!
While I’d certainly agree that the process is far from perfect, calling it ’screwball’ might be going a bit far. At Angelsoft we’ve tried to make it as streamlined and rational as we can. What suggestions would you have for us to improve it?
But as it is, you’re all talk, no walk.
I think that’s unfair. Simply looking at the stats shows that over 11,000 investors are participating and actively looking for investments, and have reviewed deals over 100,000 times. According to the most recent statistics from the Center for Venture Research, angels in the US last year invested $26 billion, into mostly early stage companies.
For all the investors in your network, you don’t represent real capital, you haven’t proven investment acumen, you don’t have impressive returns to show off, you don’t have success stories you can point to. You even admit you barely expect to break even.
It’s important to remember, as others here have noted, that Angelsoft itself is not a network; we are simply a software platform that services networks of angels. But that said, given the numbers above, I think it’s pretty clear that the 412 organized angel groups using Angelsoft clearly represent real capital. The metrics and risk of early stage investing are such that, as I previously noted, fully half of all investments fail. Nevertheless, according to a study released last year, angels investing through angel groups have been averaging a 27% internal rate of return on their investments. Compared to just about any other form of investment, including bank deposits, stocks and hedge funds, that’s actually quite good. As for the ‘break even’ mention, I think that might be a misunderstanding of the context. Most angel groups are not-for-profit as a group, and operate at breakeven. Their goal, however, is to help their members make a profit on their investments, which, as the statistic above shows, they usually do.
You’re not investors, you’re a social club.
Again, Angelsoft is neither an investor itself, nor a group, we’re simply a software company. But for the angel groups who use the platform, social discourse is in most cases absolutely one of the reasons that members join. But since there are a lot better clubs to join, there’s no reason for accredited investors to join angel groups unless they really want to invest [grin].
I mean, for all these reasons and more, most capable entrepreneurs wouldn’t even acknowledge an angel outfit like USV as anything more than glorified bloggers/lookie-loos.
To be clear, USV is Union Square Ventures, one of the most respected professional venture capital firms in the country. They are not an angel group; Fred Wilson, a partner at USV, was simply writing an objective blog post about the Angelsoft platform…which he doesn’t even use!
Why in the world would they take AngelSoft — or any of your dubious peers — any more seriously?
It’s precisely because there are so many sites which purport to ‘connect’ entrepreneurs with investors that we have released Angelsoft 3.0. Now, for the first time, entrepreneurs (and everyone else) can look at real, live statistics on the system. They can see that over 11,000 accredited investors and venture capital firms are actively making use of the platform to review and collaborate on funding deals. That’s why (we hope) they will take us seriously.
T. R. I hope this answers the points you’ve raised, but I’d be happy to continue the conversation either here in blog, here in the Angelsoft blog, or directly by email. Thanks for raising taking the time to comment!
The idea of collaborating with all the players in the market to build a completely open set of web services, built on open data, to provide full transparency would be a big step in the right direction.
That was our goal, and it looks like we were successful. I think it makes sense to understand the business case, as well as the aesthetic and technical issues that people have been discussing over on Hank Williams blog.
We were facing a real business issue: There are dozens of sites that purport to have networks of investors. We know for a fact that we are the only one who really does. The business problem was how do we show that in a way that the pretenders couldn’t copy.
That’s why we made the decision to display a live window into what’s happening with our software on the homepage. There is no gloss on this. Sometime we look lame (like in the middle of the night or the fact that only 1.3% of applicants get funding). Sometimes it looks like our network is exploding with investors (most of the time or the fact that 1.3% of applicants actually get funding).
Either way, we thought it was time to cut through the talk and let people see who we are and make their own decisions. I’d challenge any other purported network of investors to do the same.
Angelsoft 3.0 brings entrepreneurs an unprecedented view into the world of early-stage capital. We now allow entrepreneurs to browse through the 380 Angel Investment Groups and early-stage VCs that use Angelsoft.net, and apply using a single common application.
Over the last 4 years, the early-stage industry has standardized onto our deal flow management platform. 380 Angel Groups and early-stage VCs representing 10,000 accredited investors rely on Angelsoft as their exclusive tool for evaluating companies. This is the largest network of early-stage capital in the world, and a historic milestone in the early-stage industry.
Until today, entrepreneurs had to know that an Angel Investment Group existed to apply to that group. Now we have made our entire network searchable for the first time. Using Angelsoft’s Group Finder entrepreneurs can easily find groups near them, view their public profile, and apply directly using a common application. Angelsoft even provides an automated News Feed, so entrepreneurs can track group activity as their company moves through the investment process.
If the entrepreneur is looking for broader exposure, they can post to the private Investor Community in Angelsoft, a deal forum used for cross-group collaboration. Entrepreneurs can now post their deal along side those added by investors. The investor community collaboratively moderates deal flow, pushing the best opportunities to the top.
We are excited to bring this funding resource to the entrepreneur community and look forward to an exciting year. We believe it will be a big one for the early-stage industry.
1. Enter your location in the left hand column of the Group Finder to sort groups by distance from you.
2. Click the View Site link to learn more about the group and the Start Application button to begin the application.
3. You can have up to three active submissions. If you apply to more than three, your deal will go into the group’s Bulk Submission folder.
4. If you want to apply to an additional group click the Delete button next to an active submission. This will free up a spot and allow you to submit without being placed in the Bulk Submission folder.
Full Explanation:
Finding the right group to apply to can save you considerable time and money. Groups often have specific criteria they are looking for in a business such as industry and investment range. Applying to the correct group greatly increases your chance of additional funding talks. While it may seem like a good idea to send your plan to as many groups as possible, this can actually hurt you. Angelsoft is an ecosystem, and investors quickly ignore companies that abuse the system. To further prevent misuse, if you have more than 3 active submissions, your application will go into a group’s Bulk Submission folder. You may delete an application to free up a spot. If you are looking for broad exposure we suggest applying to the Investor Community , which is accessible to the 8000 investors and 450 groups that use Angelsoft.To find the right group for you, start by entering your location in the left hand column of the Group Finder. This will display the groups that are closest to you. A local deal is more attractive to an Angel, so these are the best groups to apply to first.
Click the View Site link next to a group’s name and familiarize yourself with their funding criteria. If you think your company is a fit, click Start Application. If you do not have an Angelsoft account you will be asked to register.
You can save an application as you work on it, so there is no need to finish it at once. All of your applications can be managed from the My Application tab. You can start as many applications as you want; you will only be placed in the Bulk Submission folder if you SUBMIT to more than three groups.
If you have already submitted to three groups, and would like to submit to an additional group, you can click the Delete button next to an active submission. Usually you would do this after the group has declined your deal. This will allow you to submit to an additional group without being placed in the Bulk Submission Folder.
