There they gave a great 30 minute presentation about how prospective angels should find deals, work with portfolio companies, and approach angel investing in general (I won’t spoil their grand finale, but suffice it to say that the last five minutes of their presentation should be mandatory viewing for every past, present and future angel investor on a monthly basis.)
But don’t take my word for it, listen for yourself:
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.
John May is the Chairman Emeritus of the Angel Capital Association, the official umbrella organization of the leading angel investment groups in the United States. He is a major figure in the global angel sector, having written two seminal books on angel investing, one for entrepreneurs on fundraising, and another for angels on best practices in investing. John serves as the primary East Coast trainer for the ACA’s Power of Angel Investing seminars, and through his management firm New Vantage Group runs several of the most respected andactive angel organizations in the country (which, of course, all use Angelsoft to manage their deal flow and investment collaboration.) What follows is a clarion call to serious angel investors that John issued this week in light of the capital market gyrations.
“Calls have been flooding into me from the press, our investors, and our portfolio entrepreneurs about how to react to the darkening economic environment.Early-stage investors in entrepreneurial companies have always represented themselves as patient investors and supportive partners, not financial engineers. In fact, we angel investors have frequently thought of ourselves as “mentor capitalists.”
So it occurred to me that in this time of political uncertainty, lack of clear direction from economists, and once-in-a-lifetime hurdles, we must stand up and either be true classic angel investors or we should go home. I seriously think that we will look back on this era as one when we stood by our companies and separated ourselves from the quick buck, irresponsible masters of the derivative empire or when we ran and confirmed to the popular press that we were hobbyists and not very angelic at all.
Those of us who believe that serious angels – located in all cities, all states – formed the Angel Capital Association and educated themselves at Power of Angel Investing seminars and told foreign guests that we were part of a movement, must now stand up and support American entrepreneurship like never before.
How can we demonstrate our true colors? Here are just a few action items that come to mind – a short list I hope you will expand and communicate to others in our venturing community.
First, be honest, realistic and communicate.Like never before we need to bring our wisdom and experience to bear and tell it like it is to struggling entrepreneurs. We have a principal-to-principal relationship like no other asset class and we must communicate like never before.
Second, demand stark reality in planning and operations and assume the worst of the coming recession. Do not take half steps. Do not rely on past assumptions of pipeline, financial institution support, and prior partners. Re-confirm relationships.
Third, remember cash is king.Husband current resources, talk to co-investors about capacity to continue support, demand review of current operating assumptions.
Fourth, expand on dialog collaboration with like-minded investors who could partner in supporting current companies in the coming months – syndicating has already becomecommon among angel groups – it may be vital in order to stretch resources. In a time of lack of trust among financial institutions,we need to work alongside fellow sophisticated angels by co-investing in existing portfolio companies.
Fifth, task angels to seek alternatives to growth and to find exits that were ignored, discounted, or unknown before who could buy the company, who could provide support in the short term, and what would happen in a worst case scenario.
Last, angels need to be honest with themselves and not ignore the reality of limited resources available to do new deals even while “protecting our own children.” I suspect in the coming six to twelve months many alluring new opportunities will have to be reviewed in light of the blight of our existing children, and if we meant what we said about being different than hit-and-run financial engineers, we should honestly address current company survival plans before leaping to the next best thing. We may be able to do both – but inward reflection and some “reality therapy” must come first before executing a revised 12-month plan.
We don’t know how bad the upcoming recession and credit crisis will be, but we, of all investors, should use our experience and long-term perspective to help our early-stage innovative company community through these uncharted waters. Let’s stand up together.”
John May
Managing Partner, New Vantage Group, Vienna VA
Chair Emeritus, Angel Capital Association
Alan Patricof is one of the country’s most important venture capitalists and angel investors. He founded the VC fund Patricof & Co. in 1969, which has gone on to become 300-person Apax Partners, one of the world’s largest private equity investors. Three years ago, returning to his roots, he founded Greycroft Partners, an early stage $75 million fund focusing on technology startups (and an Angelsoft user). Throughout this time he has also been an angel investor with his own funds, and continues as an active member of New York Angels. In light of the gyrations in the world’s capital markets, and particularly a Doomsday meeting that Sequoia Capital was reported to have had recently with their portfolio companies, Alan felt it important to put things into perspective.
Here is the full text of a statement that he issued this week, addressed to early stage companies and the investors who fund them:
“The comments made by the partners of Sequoia Capital at their recently held ‘CEO Summit’ have been widely covered by leaks to numerous bloggers. These bloggers have disseminated the details and spread the contagion of the sentiments to the public at large, unfortunately running the risk that the words become a self-fulfilling prophesy. Without challenging the comments, which expressed a heightened degree of doom and gloom for the economic prospects of young start-up companies particularly, I do think it calls for a somewhat more restrained response on the outlook and required action before throwing the baby out with the bath water. Certainly, we are going through a period of enormous economic and political uncertainty. The loss of confidence, primarily in our financial system, as a result of the excess of the past five to ten years (if not longer - we may never know how long some of the flawed practices have been going on) is one of the leading contributors. We are also at the moment looking for leadership on the political front, and both because of very low public support for the President and because we are in the midst of a heated election for his successor, we have no real voice of authority to provide some guidance, reassurance, and inspirational confidence that the bus has a driver who knows where he is going.
Nevertheless, aside from an over-inflated housing boom that had to collapse sooner or later and a complicated financial system that arose in part to fuel this engine, the basic economy was in reasonable shape, with GNP growth and productivity gains supporting a solid, if not vibrant outlook (I know the automotive industry is also going through bad times but it no longer pervades the economy as once conveyed in the expression, “As GM goes, so goes the nation.”)
Advances in technology are allowing companies to make goods and provide services faster and cheaper. The wireless revolution and the Internet have made the dissemination of information easier and more pervasive for the entire world and brought significant benefits to every phase of our economy. That is not going to stop, although it may temporarily slow down. In these difficult times, there will be winners as well as losers (and the former may be fewer in number for a while).
The point is, the financial problems are being addressed, if not a bit belatedly, and some international mechanism will be found in short order for some coordinated policy that will restore order and confidence to the system.
Most young companies, with which we are specifically concerned, are financed with equity capital. That has its positives and negatives; on the one hand, debt is a very small factor in the capital structure of most small companies so loan foreclosures and the interest rate burden are not of prime concern. On the other hand, equity capital, which is provided by private investors, requires confidence in future prospects for reaching profitability and creating a strong market value. Certainly under current conditions it is hard to engender such confidence although history has demonstrated that it is in times like these that great opportunities are created. I have always said, “The best time to invest is when the drums are beating, not when the trumpets are blaring!”
This is surely a time for companies to pay meticulous attention to detail, particularly their cost structure. It is a time to be realistic in their near-term assumptions for revenue growth and take nothing for granted. Raising additional capital to support operations is of course critical, as it is at any time, but this is particularly a time for young companies to be extra cautious in developing pragmatic assumptions of their needs and in focusing on the amount and not necessarily the cost of that capital.
This is not a time to panic, cut off all investment in the future, and burrow into a dark hole. Take a page from the packaged goods industry that the time to gain market share is during tough times when your competitors are weaker in responding. And while this may feel more directly related to portfolio companies, we as a venture industry should not retreat either. It is our strong belief that we can and will continue to make sound investments in excellent opportunities. It is as good a time as ever to start a company with sound fundamentals.
So my point is to heed the caution of the Sequoia comments but to use them only as a strong message to reexamine all cost elements and growth plans and use this opportunity to assure that you are a survivor. Find a way to use this moment to gain your greater share of the market by providing a solution that is needed by others to improve their prospects in the difficult environment ahead. Tighten your belt and live within your means. Although the timing makes this message seem more prescient, it is a philosophy that works for successful companies at all times and at all stages; it is simply put, good business. This is not a time for heroes!”
———–
Here is a Red Herring interview with Alan from last year, explaining why he has such faith in the early stage technology community.
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.
Last Friday we provisioned a new group onto Angelsoft. We realized on Monday that they were not an Angel investment group, but rather a service provider to entrepreneurs. This was our misunderstanding and not theirs.
Angelsoft is strictly for active investors, Angel groups, and VCs. As a result we had to remove them from the system. Before being removed, they had posted a Group Deal to the Investor Community , and we want to apologize for any confusion that it caused.
We have been very stringent about who is given access Angelsoft to ensure that when you are using the paltform to colaboarate, it is only among accredited investors. If you are ever feel that a group is on the Angelsoft platform that should not be, please contact us at support@angelsoft.net.
You have submitted your application to the Investor Community and now you want to know what happens. Here is the rundown.
Once you have submitted your application you will be brought to the Application Manager.
From here you can see the number of investors that have viewed your deal.
If an investor is interested, they will refer it into their Angel group’s Angelsoft account for review. Angelsoft is used by most of the worlds Angel groups to manage ALL their deals, not just the ones from the Investor Community. If you are going to work with an Angel group, chances are your deal will be done in Angelsoft.
When an investor refers your deal into their groups Angelsoft account, the General Manager is notified by email. That deal shows up at the top of the New Submissions list which is the first thing that the members of the group will see the next time they log in.
You will be notified by email of the referral. When you log into the Application Manager you will see that you have a new section for this group.
A deal specific email address is included. This allows you to communicate with the investor that referred your deal along with the General Manager of the group. As your deal progresses, you will continue to use this email to communicate with all interested investors.
Over the past few weeks we’ve received a number of questions from Entrepreneurs asking us what the Investor Community looks like to Angels. While we wish we could let you in to take a look around, we need to keep it restricted to SEC accredited investors.
What we can do is give you a peak behind the scenes of what the Investor Community looks like to Angels
The Main Page
Angels can use this page to quickly see:
How many deals have been submitted by entrepreneurs in the last 24 hours
Deals posted from other Angel groups. Angel groups often would like to invest in a company, but do not have enough interest from their group to provide the total amount that the entrepreneur is looking for. When this happens they post to the Investor Community letting other Angels know that they are looking for additional investors.
How many deals are in the Angels local vicinity
Deal Directory
The Deal Directory is where investors can browse through submitted deals by options such as date, location, number of views, and industry.
Summary Information
On the Deal Directory each company includes summary information.
This includes:
Company name
The number of views the deal has received (you can also see this number when you log into Angelsoft)
The rating other investors have given the deal
Whether or not a video is included
The One Line Pitch
Industry
A Deal
Each deal is displayed in a standardized format that Angels are familiar with from their personal Angelsoft accounts.
The answers to your questions are listed in the main section. Your companies vitals such as Management and Financial Information are listed in the side bar off to the right.
The video is available to watch as the investor reads through your application
Your documents are available for download. A PDF of your application is automatically generated for the investor to print out (You can also download this PDF by clicking on Preview in your application)
When An Investor Is Interested
If an investor is interested in a deal they can refer it into their own group for further review. At this point you will be notified.
The launch of the Investor Community was announced by David S. Rose at SXSW. Since the announcement entrepreneurs have been busy filling out their applications to take advantage of this new funding resource.
If you missed his announcement, here’s the rundown. Over 400 groups worldwide use Angelsoft to mange their deal flow. If you have applied to an Angel Group online in the past, you probably already have an Angelsoft account.
Up until now, entrepreneurs would need to go to each Angel Groups website to apply. We received hundreds of emails from entrepreneurs asking us, “How can I access ALL of the Angel Groups that use Angelsoft”
We decided to respond with the Investor Community. The short explanation is that it allows you to get your company in front of all 400 groups and 6000 Angels at once.
When you apply to the Investor Community, your application is posted in a section of Angelsoft that is available to all of the Angels that use our system.
When the Angels click on a deal they are presented with the application you filled out along with your video pitch. If an Angel is interested in a deal they can “refer” that deal into their own group for review. Check your Application Manager to see how many views your application has received and if it has been referred into any groups.
