A select sampling of angel investment sources.
The Media Alchemists
New York Angels
New York City
These angels are much more Wharton than MIT—they're management types, as opposed to techies. Most of New York Angels' companies are further along than is typical for angels, and as you would expect out of New York, the group's portfolio has a lot of media businesses. The New York Angels prefer to see innovative applications for existing technologies, as opposed to brand-new technologies. A good example is Adapt Media, which pioneered selling advertising on scrolling displays atop taxicabs. "It was a weird medium that hadn't been tried before; would anybody actually buy it?" says the group's director, Chris Saxman. The group's website has a one-page submission form. (Don't forget the $150 filing fee.) Firms that look promising to Saxman go to a monthly screening session; survivors are invited to present at the full group's monthly breakfast meeting. Investments are strictly the decision of individual members; a typical deal will attract four to eight members, each kicking in $25,000 to $100,000.
The Achievers' Network
CommonAngels
Entrepreneurs who approach CommonAngels can be assured that the group's members have been on the other side of the table: They've founded 118 companies (mostly high tech), sold 104 of them, been CEO of 93 of them, and taken 34 of them public. To apply for funding, send managing director James Geshwiler an executive summary. If the firm sounds promising, he'll have a group of experts in the technology in question grill management; if the deal gets past them it will go to a group of generalists. Firms that survive those three cuts present at the CommonAngels' monthly meeting. In 2000, about 20 members came up with close to half of a $3.2 million A round for Bitpipe, which distributes literature from IT companies over the Web; many members continued with two subsequent rounds. When Bitpipe was sold last December, members got from two to five times their money back.
The Old Hand
Bob Geras
Bob Geras opened his own investment house in 1978 and has been Chicago's most active angel ever since. He has invested in all kinds of tech companies—software, biotech, medical devices, nanotech, telecom—as well as insurance firms, banks, oil drillers, motels, and real estate. Geras is tough; bring a business to him and you'll probably get a lower valuation than you would elsewhere. The tradeoff, he says, is that you'll end up with a working product that people are buying, and doors will open for you when you're ready for follow-on investors. Last year Geras funded 11 deals, and he says he looks at each of the seven or eight that cross his desk every week. No website, but he doesn't mind us telling you he can be reached at bob@vcbob.com.
The Professionals
The Angels' Forum
This small group is composed of successful former Silicon Valley executives who now do angel investing full-time. They meet weekly, not monthly, and most of each meeting is taken up with tracking the progress of firms the group has already invested in. "We see, feel, touch our new portfolio companies about every 48 hours," says Angels' Forum founder Carol Sands. "When you're dealing with very early-stage start-ups, 48 hours is a really long time." Entrepreneurs can approach Angels' Forum by filling out a one-page "Snapshot" form downloadable from the website. The odds, of course, are long: The group gives preference to firms referred by members, and does four to six deals a year out of the 3,000 submissions it gets. The group's tech focus draws it to cutting-edge developments, including, for example, an intriguing new idea for fighting obesity. Recent research suggests that one way fat people may differ from skinny people is in the degree to which their stomach walls vibrate. Thin folks' stomachs vibrate sufficiently to absorb the nutrients they need and send the rest on to quick elimination; obese people's stomachs are less efficient in that way. IntraPace, a recent addition to the Angels' Forum portfolio, makes a pacemakerlike device that sends pulses to the stomach to shake things up.
The Angel-like VCs
Silicon Alley Venture Partners
SAVP is a venture capital firm that specializes in early-stage companies in the New York area; it will put in anywhere from $250,000 to $1.5 million as a first round. Like New York Angels, SAVP is interested in applied information technology rather than new core technologies. Managing partner Steve Brotman says his company tends to invest in "corporate dropouts from industry versus university spinouts. It's not coming out of a lab, it's somebody coming out of JPMorgan." Companies in the firm's portfolio include Critical Mention, which searches and monitors TV broadcasts, and GameTrust, which sets up tournaments for online games. Brotman says that 85% of SAVP's A-round companies get to a B round of $5 million or more from a later-stage VC in an average of 18 months. Part of the reason, he says, is that those VCs like the institutional-quality full due diligence SAVP conducts on the companies it backs. Executive summaries can be submitted to bplans@savp.com.
The VC-like Angels
The Washington Dinner Club
Like venture capital firms, this group raises money in discrete funds. The Washington Dinner Club is the name of the third LLC formed by John May; the fund is almost fully invested, so the group is now starting its fourth fund, Dinner Club IV. The Dinner Club tends to invest in the sectors that are thriving in the Beltway area: information technology, defense, homeland security. May calls the winnowing process "a hundred to ten to two"—out of a hundred business plans submitted via the website in a month, 10 merit a meeting with a screening committee; from those, two are selected for presentation at the group's monthly meetings. (Yes, dinner is served.) Afterward, members vote on whether the fund will invest. Individuals then have the option of putting in more of their own money. A club member who had invested in an A round for Matrics, a maker of radio frequency identification chips, introduced the Dinner Club to the firm in 2001; it ended up being one of two angel groups in a $14 million VC-led B round, and last fall got four and a half times its money back when Matrics was sold to Symbol Technologies for $230 million.
