Watch this slide show and then go to Inc.com's Angel Investing special section for additional angel investing resources.
Main feature: Angels with Angles
Angel investors are changing. Here's what they're looking for, how they operate, and (because the devil is in the exit strategy) what they expect for their money.
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Angels In America
Published July 2005
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COMMENT ON THIS ARTICLEThe Angel-like VCs
Silicon Alley Venture Partners
New York City
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.
founded 1998 | four principals | total invested: $40 million | companies funded: 18 | www.savp.com
The VC-like Angels
The Washington Dinner Club
Vienna, Va.
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.
founded 2000 | members: 75 | total invested: $28 million | companies funded: 12 | www.washingtondinnerclub.com
The Ringmasters
Keiretsu Forum
San Francisco/East Bay, Silicon Valley, Santa Monica, Westlake Village, Long Beach, Hawaii, Calgary, Chicago, Boston, and Dallas-Fort Worth
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% 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.
founded 2000 | members: 356 | total invested: $44.4 million | companies funded: 69 | www.keiretsuforum.com
The Commercializers
Technology Tree Group
Houston
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.
founded 2003 | members: 16 | total invested: undisclosed | companies funded: 4 | www.technology-tree.com
