Irina: How do you swap deals with other angel groups? By e-mail?
Corey: That was how it was done years ago, and it’s still done that way, sometimes but there’s a Web platform called AngelSoft, and that makes it really easy. There are features right inside AngelSoft, so we can just send deals right through the AngelSoft system to any group that uses it. That makes it easy.
Irina Patterson and Candice Arnold have posted a series of interview segments with Corey Silva of River Valley Investors. Corey answers a wide range of questions from how he got his start to the ins-and-outs of how RVI operates and invests.
While we appreciate Corey’s kind words about Angelsoft in the fourth segment, the 13-part series gives an excellent overview of the angel investment process.
Entrepreneurs will find it to be a helpful orientation to what goes on behind the curtain. Investors will find an interesting story of Corey’s path from Rock n’ Roll musician to manager of the River Valley Investors angel group along with a great reference point for managing an angel investor group.
Marco Messina, angel investor and serial entrepreneur, wrote in his blog The Angel Pitch Guy about the importance of the Executive Summary in the process of securing funding from an angel investment group. Marco had this to say about the Executive Summary:
I said it many times in these posts, but it is worth repeating. If you want to communicate to Angel Investors, your challenge is to be brief and exciting at the same time. Angels read dozens of plans and pitches a week, thus develop a short fuse stretched to its limit and a deja vu mindset. Every single word you use should be valued as an opportunity to break that fuse and lose your audience. Furthermore, the specific words used must strike a balance between creating “excitement, belief, opportunity-to-change-the-world, high expected returns” and projecting a perspective of “naive, smoke-and-mirrors, improbable deal, too-good-to-be-true”.
Sample Executive Summary
At Angelsoft, we have worked with many entrepreneurs and investors to create a template Executive Summary. Every group can customize their required questions in the Executive Summary, and we aim to make it a versatile tool that all venture investors will value.
Startup 2010 is a business plan competition and one-day event about entrepreneurship and digital business that will showcase 10 top startups competing for bragging rights, buzz, and a $100,000 prize. The conference is co-hosted by Silicon Alley Insider and New York University’s Stern School of Business, with support from exclusive founding sponsor General Catalyst Partners.
If you attended last year, you know that the day was filled with insights from digital all-stars and business plan pitches from 10 aspiring startups, followed by tough questioning and feedback from a panel of judges. Thriving legal startup ArticleOne Partners won the grand prize — and set a high bar for this year’s participants.
Startup 2010’s sessions will explore the intersection of mobile and content. With the arrival of the iPhone and the Android, will mobile finally fulfill its hype?
TICKETS on sale now! Get early-bird tickets for just $295. NYU Stern students get in free.
$100,000 Prize: Ten aspiring entrepreneurs will pitch their business plans in the hope of winning a $100,000 prize. The prize includes a $25,000 cash investment from General Catalyst Partners and $75,000 in goods and services ranging from:
Up to 6 months of office space in NYC at TechSpace
Legal services from Cooley, Godward, Kronish
Opportunity to launch at DEMO
Web hosting
And much more
ATTENTION ENTREPRENEURS: Submit your business plans now! Applications are open today through April 12. [Note: While the conference will focus on mobile + content topics, applications can be for any type of digital business.]
Don’t miss this annual forum for outstanding entrepreneurs and early-stage companies to meet VCs, investors, journalists, and other members of the East Coast startup community.
For those new to early stage venture investment, syndication is when multiple investor groups (VCs or angels) contribute funds to a cumulatively larger investment sum in a single company. Syndication is an opportunity to spread risk, combine resources, and collaborate with strategic partners in other regions.
Venture Hype has published the first post of a 2-part interview with Paul G. Silva regarding “Angel Group Syndication Process Design.”
Silva emphasized the importance of unified collaboration. The groups used Angelsoft to coordinate their combined due diligence efforts:
Unite ALL interested investors from all groups into 1 due diligence team, all sharing 1 set of tools. In our case we all used AngelSoft’s Co-invest feature to make sure everyone was on the same mailing lists and looking at the same documentation.
Thomas Korte wrote a compelling blog post about a recent angel investment he made in under 3 hours.
Thomas notes, “It’s important to point out that such a turnaround is highly unusual, even for me. It is more common to take weeks, sometimes months before investing in a company.”
We were glad to hear how Angelsoft played a supporting role in his decision:
Another important fact was that all of the documents were well prepared and easily accessible. David gave me access to his “deal room” on Angelsoft (think salesforce for angel investors) and I could quickly understand what they do, what their plans are, and what traction they already gained.
Within Angelsoft I could also read the conversations other investors had with Ryan and see who else was investing. Using Angelsoft made the process of funding SetJam much easier and faster.
Mark Suster wrote a great article on raising angel money. Mark is a VC and 2-time entrepreneur, and his blog Both Sides of the Table is a great resource for investors and entrepreneurs alike.
We highly recommend reading Mark’s post on strategies for raising money from angel investors. Here is an excerpt.
One side of the argument – angels should price:
18 months ago I sat on a panel with Ron Conway, the legendary angel investor from Silicon Valley who invested in Google, Twitter, Digg and many other early-stage Silicon Valley success stories. The topic of angel pricing came up. Ron said he never likes to do convertible debt deals and always insists on pricing his investments. His rationale was clear, “If I invest in a company I open my Rolodex for them. I help them with business development introductions. I introduce employees. I give them credibility in the fund raising process. Let’s say the company was worth $1 million when I met them and I’ve helped them with both my Rolodex and my cash and they can now raise a round of venture capital at a valuation of $6 million. I would be hurting my own interests. A $500,000 investment at a 30% discount to a $6 million round is still priced and more than $4 million and is certainly worth much less than my investing at a $1 million pre-money where I could own 33% of the company.”
Whether you’re an entrepreneur, angel investor or VC, Mark provides valuable context and insight for you in his blog.
I never wanted to be an entrepreneur. When I graduated college, my goal was to be president of IBM. Ten years later, I ran into a boss who had sales contests where first prize was lunch with him!
Barry Moltz
Fortunately, I got inspired by a client who had started his own business and asked me to join as Director of Sales. I secretly wondered if I could be an entrepreneur too. I took all the entrepreneur tests I could find. They asked me questions like:
Q1. Do you want to make a lot of money? A. Yes, double yes.
Q2. Do you want to be your own boss? A. Yes, I don’t need no stinking bosses.
Q3. Do you have great ideas you want to see succeed? A. Yes, all day and all night.
I was so excited after taking these tests. I knew I was ready to be an entrepreneur. However, 20 years and four businesses later, I realized that these types of questions do not prepare anyone for having their own business.
Instead, take my entrepreneurship test to see if you are prepared to venture out on your own.
Q1. Are you resilient? All entrepreneurs need to be able to ride the rollercoaster of good and bad times on a daily basis.
Q2. Can you ask for help? You don’t know everything. You need to be able to listen and evaluate the advice of the people around you.
Q3. Can you get people to follow you? Loners need not apply since entrepreneurship is not a solo sport. In order to build a business, you need to lead and delegate.
Q4. Do you like to network and meet people? Business is ultimately about people. You grow your business through the people you build a trustful relationship.
Q5. Do you like to sell? If you don’t have customers, you don’t have a business. For awhile, you will be the chief sales officer.
Q6. Do you do well in ever-changing chaos? Everyday is different. Some days are very different. Get used to it.
Q7. Can you live on a variable monthly compensation? You don’t collect a paycheck every month like at a job. You pay your employees and vendors first. Some months, there may not be anything left for you.
Q8. Do you have a good personal support structure? You will need it. When you have a bad day, you will need someone to pick you up. When you have a good day, you will want to celebrate a lot with the people you love.
Q9. Are you flexible with your goal setting? As an entrepreneur, you will need to set patient interim goals and change your target as you succeed and fail.
Q10. Can you hold a real job and work for someone else? If you can, do it. Having a job is probably an easier career especially in the short term.
Entrepreneurship is a tough test. If you answered yes to 8 of 10, then you are ready. There is no bigger reward in business then being an entrepreneur.
If you scored below that, you are not quite ready to quit your day job. If you no longer have a day job, consider joining a small business to get the experience you will need to venture out on your own.
Barry Moltzis a Chicago-based serial entrepreneur, business consultant, marketing expert, mediator, speaker, and author of several books on small-business success. Beginning today, Barry will be delivering his how-to advice and ideas for entrepreneurs via Enterprise City, Crain’s blog for Chicago’s small-business owners.
[Guest post by Rob Delman, a professional angel investor and an active member of Golden Seeds in New York. He is proud to be nicknamed the “Golden Dude” by his female forum mates.]
As an angel investor, have you ever sat in a room listening to a pitch and have had no idea what the entrepreneur was talking about? Do your eyes glaze over while your hands reach for your BlackBerry?
So often, I find that entrepreneurs forget that angels are typically a little knowledgeable about a lot of things and very knowledgeable about nothing. If the entrepreneur is speaking “above” the audience but is still engaging, they may stand a chance of obtaining funding but it is doubtful considering the multitude of opportunities available for angel investment. It is easy of course to put all the blame on the entrepreneur but at the end of the day, we share some of the responsibility as well.
Lately, I have found a very effective way to combat this situation. It takes some effort but if you want to really give every pitch the full attention it deserves, it can be worth it. The vast majority of entrepreneurs submit their applications online via Angelsoft. This is a wonderful piece of software written by angels for angels.
Check with your angel group to get a schedule of presenting companies at your upcoming forum, log onto Angelsoft and see if the entrepreneur has uploaded a video or any other supporting documents. This is also a great time to review their application and do some very light due diligence of the people, product, competitors and industry.
We are all experts at using Google (although personally, I now prefer Bing) so now is the time to show off our skills. Take no more than 10 minutes to enter search keywords based on their application. Also review the company’s website and do a search for the founder/CEO. If you are going to hear 6 presentations, this will take no more than an hour which is time well spent if it enables you to engage proactively with the entrepreneur and ask probing, but appropriate questions during the Q&A part of the presentation.
Remember, it is the responsibility of both the entrepreneur and the angel to come prepared to the pitch!
The New York Times posted a great article on finding Angel funding. Our four favorite takeaways are from Ted Ray of FlyRight:
“Have a product on the market. Nothing speaks more loudly than revenue coming in.”
“Do not ask other people for money unless you have spent your own.”
“The business plan you show to potential investors should be concise. He [Ted] suggested using software on Angelsoft.net.”
“Explore every angle. If an Angel says no, ask him for the names of four other Angels who might say yes…My goal is to get 100 introductions to get 10 meetings to get three presentations to close one deal.”
The team at Angelsoft tries to be as active as possible in the entrepreneur community. One of the ways we do that is to attend conferences like SXSW and, most recently, the Web 2.0 Expo. Here is a rundown of our experience at the Expo in San Francisco.
Funding Q&A
Jason Schwartz (Community Manger) and Evan Bartlett (Senior Account Manager) lead a packed session at the Web2Open on funding. The Web2Open is the free section of the Web 2.0 Expo that I hope more entrepreneurs take advantage of in the future.
The primary topic of discussion was helping entrepreneurs understand where their company falls in relation to a startup an investor would consider ‘fundable’. I plan on blogging more on this topic later.
Sales
Evan Bartlett lead a Web2Open session on Sales covering how to get a meeting, and figuring out who the key decision maker is in an organization. Sales is often an overlooked part of a startup and some quality information was shared on how to succeed.
Angelsoft Entrepreneur User Group Meeting
Entrepreneurs from all over the Valley came to speak with us about their experience with Angelsoft. Entrepreneur feedback is crucial for us to build the best product possible, and I appreciate all of you who came out. I also spent some time going over their one-pagers to tweak them for optimal effect with investors. For those of you who were able to join us, I hope you found the meeting as informative as I did.
Challenge and Opportunity: Angel and VC Funding During an Economic Crisis
I had the pleasure of interviewing Angelsoft’s CEO, David S. Rose, during a session at the Web 2.0 Expo. The hour long interview covered a lot of ground including the landscape before and after September, and how this has changed investor’s strategy. More on this in a future blog post. David and I had the opportunity to speak with entrepreneurs who spent another hour with us after the session. If any of you did not get your question answered, feel free to ask it in the comments below.
