The Ringmasters
Keiretsu Forum
The largest angel network in North America derives its name from the vast Japanese conglomerates that emerged after World War II. Keiretsu Forum combines individual and regional autonomy with the sharing of research and due diligence. All members make investment decisions on an individual basis. Companies apply online to the chapter nearest them. A company that earns a commitment from one chapter may travel to other chapters to make pitches for additional funding and will find that those chapters have already pored over all the research Keiretsu has done so far. The group will invest in anything; 30 percent of the portfolio is in real estate. At the San Francisco chapter, the largest with 150 members, about 50 applications each month go to an industry-specific prescreening committee. From those, seven to 10 are selected for presentation before a 30-member screening committee. Three to five are then selected to present before the full members' meeting, which founder Randy Williams calls "the Big Show." One thing big about it is the presentation fee companies must pay at this point—$3,000. Williams says the fee defers costs and serves as a filter system: Most of the companies that present have revenue.
The Commercializers
Technology Tree Group
The Federal Government spends billions of dollars a year on scientific research. Here's a group of angels, organized as an investment firm, that is dedicated to turning some of the thousands of concepts paid for by the government into companies that make money. Last December, Technology Tree signed an agreement with NASA to build companies to develop ideas cooked up in the agency's labs. It has a similar deal with the U.S. Department of Agriculture and is pursuing other federal agencies as well. The group also invests with technologists who have received federal Small Business Innovation Research grants. Mike Fitzgerald, CEO of Technology Tree, says the group is starting to assemble management teams to run the companies it is forming, so he's got a proposition unique to this list: If you're an entrepreneur with a track record building businesses but don't currently have a company or a new idea, send Technology Tree a resume.
The World-Changers
Investors' Circle
The oldest organization on our list has a funky combination of loose structure and social activism. The website defines the group as a "national network of early-stage private investors who seek financial, social, and environmental returns on their investments." Though members are scattered across the country, "ethos holds us together," says chairman and CEO Woody Tasch. Applicants submit business summaries to the website; the up to 60 that are approved by the staff each month can get circulated, for a fee of $350, to the members nationwide. From there, any number of things can happen. Often the member who has the best combination of proximity to the company and experience in dealmaking will lead a group of members to invest. An affiliated professionally managed fund, Commons Capital, serves members who don't have the time or deal experience to invest individually. Alternative energy is an important category for this group. Investors' Circle also supports localizing the food supply chain; hence its support of the Farmers Diner, a Vermont restaurant that gets most of its food from nearby farms and is planning to expand to a national chain of diners that do the same thing for their local agricultural communities.
Sidebar: Do Not Say, "I Just Want the Money"
And other keys to presenting yourself before potential investors.
Be able to describe your business—what it does and who it sells to—in less than a minute.
Have a handle on who the competition is, why your solution is better, and how you are going to gain market share.
Avoid unrealistic "hockey-stick" projections that show your product or service suddenly rocketing. It won't.
Emphasize the likely exits for investors.
Answer all questions honestly; don't try to hide information that doesn't support your case.
Have respect for your prospective investors. Understand that those who do invest are going to be involved with your company for a long time. Often one or more of your investors will take a seat on your board of directors. They know things you don't. Don't tell them you "just want the money."
Prepare yourself. Many groups offer free coaching to entrepreneurs who have passed their initial screens and are about to present before the entire group.
Sidebar: "Money Is Not Just Green"
What angel investors know and entrepreneurs need to.
