If you would like to get the latest on what’s happening with angel and venture capital term sheets you need to head on over to Troutman Sanders on Tuesday at 11:45.
The event will feature an informative panel including Sig Mosley, Atlanta’s superangel who drives a lot of the angel and venture activity in Georgia, Alan Taetle, Partner with Noro-Moseley Partners who is putting newly raised money to work, and Mike Siavage of Siavage Law Group.
The event is being catered by The Varsity. Come out and enjoy a Varsity lunch while meeting investors and learning about the terms they are dishing out. Below are the details.
Location: Troutman Sanders
600 Peachtree Street, Suite 5200
Atlanta 30308
Time: 11:45 – 1:15
Cost: $25
Register here.
It’s back.
ATDC is now taking applications for CapVenture, a unique training program that educates and equips early-stage CEOs and executives for smarter, more productive capitalization of their businesses.
We moved the timing of CapVenture up a bit this year. It starts on August 19th and concludes with an investor forum on October 7th. Last year the companies that presented at the forum generated 56 requests from investors for one on one meetings. And five of the fifteen companies that participated in the program raised money.
But why did we move the date? To give the participating companies some time before the holidays to get out in the fund raising process. But that is not all. Get this. The top CapVenture companies will have an additional opportunity to
present to dozens of investors through an automatic slot during the
ATDC/Venturelab early stage forum at Venture Atlanta.
The early application deadline is June 19th and the final deadline is July 15. If you are serious about raising money for your startup, you should apply. We intend to provide some valuable fundraising tools and a workshop to every company that completes an application.
One of the groups that is working to boost entrepreneurial and startup activity in the Southeast is the StartupLounge. Each quarter, StartupLounge hosts a private networking event for
early-stage entrepreneurs and investors here in the Southeast. Formerly
called "Capital Connections", CapitalLounge takes place at a location in Atlanta that is only divulged to approved attendees. Who is approved? Fast-growth entrepreneurs based in the
Southeast U.S., as well as venture capital and angel investors from
around the country.
I tell nearly every entrepreneur that walks into ATDC looking for funding that the Capital Lounge is the place to start. The format for CapitalLounge is simple: cash bar, free gourmet food spread, lots of
networking, several hundred vetted attendees, and no fees at the door. Entrepreneurs need to go prepared to aggressively interact with the investors. To pitch if you will, in a non pitchy way.
The next CapitalLounge event is taking place on May 21 from 6 to 9 pm. If you are interested in attending you need to create a profile on StartupLounge. Once your profile is approved you can then apply to attend.
I hope to see you there!
Oh yeah, I almost forgot, the StartupLounge folks on going to be onsite creating a podcast during our Entrepreneurs Showcase. Stop by and say hi to Scott and Michael.
Guy Kawasaki moderated a panel of angel investors to discuss what they look for in investments, how they evaluate deals, and how best to approach them. The panel included Andy Bechtolsheim, co-founder of Sun Microsystems, Ron Conway, the "godfather of silicon valley," and Dr. Ian Sobieski, founder of the Band of Angels.
Key takeaways from the discussion:
- You can’t reach these angels by sending them an email out of the blue.
- They want to read a one-page executive summary and not much more.
- They decide whether they like a company in the first thirty seconds— think HotorNot, not eHarmony.
- They don’t rely upon business plans for due diligence.
- They seldom serve on boards or do "heavy lifting" for a company.
Here’s the video:
Seems like it is not just the presidential candidates that need to be hitting the road. If you are an entrepreneur on the campaign trail to funding there are a series of events coming up that you should consider.
Capital Connections
The folks over at Startup Lounge are having their next Capitial Connections event on February 6. Mike and Scott continue to make this event better every time out. They have added the Angel Lounge to the event and are getting more investors then ever to come. Registering is relatively easy. If you want to set up a demo you can. They are going to select some entrepreneurs to do a 2 minute pitch at a microphone. Or you can just mingle if want. Sign up soon. They are going to close registration this week.
Southeast Venture Conference
This takes place up in Tyson’s Corner at the end of February. ATDC will be well represented with NeuroStar, Suniva, and VT Silicon presenting. CapVenture company SoloHealth will also be featured. Applications are closed to this event hosted by ATDC partner TechJournal South, but you can still register to attend. And a big BTW, I have a VIP code offering $300 off the price. ATDC300M.
CED Venture Conference
Finally there is the CED Venture Conference which will occur on April 16-18 in Durham. This event attracts 800+ attendees, many of which are investors seeking both bioscience and advanced technology companies. This year, CED is targeting to fill 40% of its “participation slots” with companies outside of North Carolina so that makes ripe pickings for Georgia entrepreneurs. CED is currently seeking presenters for companies from startups to growth stage. It will cost $50 to apply for the conference and depending upon what “bucket” you are placed in, you will be asked to remit additional $200-600 to present.
Recently, ATDC hosted an open brown bag session with Knox
Massey, Executive Director of the Atlanta Technology Angels. Knox lead an informative discussion about the state of angel investing. He also gave great detail about ATA, its history, investment criteria, processes and track record.
In this discussion, Knox shared a very important chart on stages of capital raising and where different investors fit in. In this slide (shown below), he described a capital gap of between $500K and $1M and $2M. Typically it is very difficult for entrepreneurs to raise more than $500K from angels. And VCs tend to only come in north of $2M, with the average first institutional round of $5M.
ATDC frequently sees companies pitching investors on raising $750K to $1M or $2M. Seeking a round in this capital gap is a very hard road. How can an entrepreneur correct this situation?
Do you have any experiences that help shed more light on this challenge? If so, please comment.
Next week the TAG/ATDC Entrepreneurs CapVenture, a practical program to assist high potential early stage tech companies to develop a viable fund raising strategy, is kicking off.
We took applications for the program back in August. A unprecedented 100 companies applied for just 15 spots in this program. This made selection decisions quite difficult and there was not room for many excellent companies.
Because of the high demand for learning about the fundraising process and the high quality of the companies that applied, ATDC has organized a special program on Fundraising Fundamentals that will serve as both one of ATDC’s weekly lunch and learns (typically for ATDC members only) as well as a TAG/ATDC Entrepreneurs special program.
Knox Massey Executive Director of the Atlanta Technology Angels investment group since 2002 will talk about the funding options available to early stage technology startups with a special focus on the state of angel investing locally and nationally. Knox will also discuss the stages that a typical technology company passes through and strategies for engaging investors. The program will take place on October 2 3 at 11:45 in room 335 of the Center Building. Lunch will be provided by the CapVenture sponsors.
Please register if you would like to attend.
Update: Please note the proper date for this event is Wednesday October 3, not the 2nd as first posted.
Greg Warrenn, CEO of ATDC member company IVOX, recently visited the good folks at the Startup Lounge podcast to discuss the TAG/GRA Business Launch Competition, which IVOX ultimately won. Greg shares his insights and what impact winning has had on his company. The ATDC acted as prelim judges for the contest and among other things it introduced IVOX to the staff of the incubator and got them heading down the road to becoming a member. It also set him up pretty well to generate follow on investment.
If you are looking for a little investment yourself I would be remiss to not mention Capital Connections (registration at bottom of the page) which is organized by Startup Lounge. Cap Connections is turning into a must attend event for any entrepreneur seeking early investment and one of the largest happenings in the Georgia technology community this summer.
The Angel Capital Association announced that angel activity was up 23% in 2006 from 2005. More telling were the optimistic comments regarding the prospects for even greater numbers this year.
Marianne Hudson, ACA’s executive director, frames the issue well. "Our research has shown a ‘capital gap’ for entrepreneurs looking for $200,000 to $2 million to get their companies to the next stage. By banding together with other angel groups and early stage venture capital groups, ACA member groups can help some companies obtain the capital they need," she said. "More and more, I’m hearing of deals in which three or more groups are working together to invest $850,000 to $1.5 million. Most groups cannot make that type of investment on their own."
We’re seeing that here in the South with the Southeast Angels effort which is helping these angel groups coordinate efforts and do more significant rounds.
It has been interesting to see how the angel investment component of the capital market has evolved. Historically, angels have had a very high beta. When things are good, they are ready and willing to invest in the next great business ideas. When things are tough, they are nowhere to be seen. They are very sensitive to fluctuations being the first to pull up stakes in a downward economy and the last to come back when things return.
But when you think about it, it makes sense. These are people who have the ability to make decisions at the spur of the moment and can run for the hills. VC funds raise money to invest in three to five year windows. If things turn south, they will still have to find places to invest, the admirable exceptions being those firms who actually chose to return committed capital instead of invest it in to poor markets.
Individual angels are also, generally, not as attuned to trends in the high tech sectors and often chase the institutional participants. Their investment activity is normally not their day jobs, so they usually rely on what the VC’s are doing or what they read in the Wall Street Journal.
Lastly, angels that fly solo tend to not complete a meaningful amount of due diligence. The work it requires to do so becomes prohibitive when compared to the amount that individuals generally invest. The downside to that is that they often make bad investments. Enough bad investments can scare them away from the market for good.
It’s for these reasons that I am enthusiastic about the current trend towards organized angel groups. It helps the angels:
- Meaningfully increase deal flow;
- Spread due diligence efforts over a larger pool of capital;
- Leverage the collective expertise of the group to better understand the leading edge of various technology sectors and, thus, avoid being too late to the party;
- Structure standardized investment materials that are mindful of the needs and concerns of potential follow-on, institutional investors; and
- Understand and react to the economic cycles, diversify their portfolios of risky, seed-stage investments, and ultimately reduce the number of participants who exit the arena, never to return.
The Kaufmann Foundation has done a great job with better organizing these groups with the Angel Capital Association. Think of it as the NVCA for angel groups. It has a directory of angel groups from around the country. Here in the Southeast, we’ve even seen a subset of those groups organize to better share deals and leverage larger groups of people within a close proximity.
I’m optimistic that the structure that’s forming around this part of the capital food chain is going to help fill the gap left behind and venture capital continues to focus on larger, later stage deals