Jeffrey Sohl at the UNH Center for Venture Research reports today that "the angel market appears to have reached its nadir in the first half of 2009". Noting that dollars invested saw, "a decrease of 27 percent over the first half of 2008". Read the report.

"How are we doing as a group?"

That's what new members want to know when they join the Tech Coast Angels. Warren Hanselman, past Vice Chairman knows exactly how we're doing; he maintains the database which tracks every one of the 157 companies we've funded. As he looks at TCA's returns, he's become an advocate for Basil Peters' Early Exits.

"The next step in the evolution of angel groups is we need to find a way to start syndicating the good deals, the deals where they're truly worthy, they're up running and their next step would normally be to go to a VC, would be to go to our sister organizations around the country and say, 'look if we band together we can put a couple of million dollars together into this thing and keep the VCs out'."

Show #254 (56:36) Listen

Save these dates
8 Dec 2009 the Puerto Rico Venture Forum in San Juan
15-16 April 2010 EBAN's 10th Annual Congress in Istanbul
5-7 May 2010 ACA's Annual Summit in San Francisco

On the show today: Hans Severiens Award winner Bill Payne, Tech Coast Super Angel Dave Berkus, the NVCA's John Taylor and Seattle's Dan Rosen, Chairman of the Alliance of Angels - that's a power panel!

John brings the NVCA 3rd Qtr report and the angels chew on the implications. "[A] deliberate industry shift towards a longer term venture capital investment strategy." We all know what that means: longer times for angels to exit. Is there an alternative to 8-9 year terms before exit? That's when things get lively!

Is the future of angel investing about to change?

Today many angel investments are the first round in a series of capital raises that will eventually include venture capital. But venture capital "resets the clock" according to Dave Berkus and can keep angels in the deal for a lot longer term while they seek a billion dollar exit. Bill, Dan and Dave have read Basil Peters' Early Exits and we discuss an alternate future for angel investing.

Show #253 (43:56) Listen

What's the state of angel investing in Italy?

Astronomers look through their telescopes to see back in time to the beginning of the universe, so too we can observe the initial formation of an angel group. Marco Villa describes the first and only angel group in Italy, based in Milan with plans to grow to other cities: the Italian Angels for Growth.

Many European angel groups enjoy some state support or tax incentives; Marco is quick to describe the support he gets: "No, nothing", so how will angels fare in a country where the "legislators don't know anything about venture capital"? It's not going to slow Marco down.

Show #252 (42:51) Listen

Join me Dec 8th at the Puerto Rico Venture Forum in San Juan.

Reflections on the 9th Annual National Angel Summit

I used to do business in Toronto, back in my Plaid Brothers Software days; we wrote software for Wall Street, Toronto calls it Bay Street, so how could I resist the invitation to moderate the War Stories panel featuring angel blogger Permjot Valia and Vancouver super angel Mike Volker. Mike's made over 100 early stage investments so you know he has great stories. My job: to engage the audience while we tell stories of lessons-learned and share a few laughs. We did.

I attended last year's event in Halifax and noticed many subtle improvements; responding to feedback they offered 15min networking breaks after each speaker or panel discussion. There were only plenary sessions. My favorite 2 speakers:

* Basil Peters (no relation) gave the morning keynote, "Selling a Business". His well developed talk offered many specifics of setting up a deal for auction/acquisition. Coincidentally, while Basil was speaking in Toronto, TCA's Warren Hanselman borrowed Basil's slide deck and gave the presentation to the local Orange County network. Great material, well delivered, vitally important to angels.
* Jeff Sohl presented to the Ontario Provincial Minister of what we'd call Economic Development. His punchline was backed up with great statistics, of course, "How to Stimulate Angel Investment in Seed and Early Stage". Jeff recently consulted with the Belgium gov't on a similar initiative recently. He calls it his Archimedes Fund, ("Give me a lever and I'll move the earth").
* Did I say just 2 speakers? It will surprise no one that Common Angels Managing Director James Geshwiler was phenomenal in the Co-Investment panel.

FROM TORONTO

Is Keiretsu Forum preparing to file suit against Jason Calacanis?

It started last week when Mahalo founder Jason Calacanis fired a shot across the bow of angel groups, like Keiretsu and Maverick Angels, that charge entrepreneurs fees to present. We're talking big fees, too: $3500 for Maverick, $7500 for Keiretsu. Are these angel groups losing sight of their purpose, that being to get early-stage deals funded? Or are they out to maximize short term profits? For more background, listen to my recent interview with Maverick Angels' founder John Dilts.

Contrast presentation fees with the recent trend by angel groups to charge a "bozo filter" (credit NY Angels' David Rose) when entrepreneurs apply. I've pleaded with Tech Coast Angels to implement a bozo filter.

The problem for TCA is that we get so many applications; we're drinking from a fire hose, often receiving more than 400/yr. Our support staff must deal with each of these applications, yet many fail to complete the paperwork, many more don't read our guidelines (we don't fund pizza parlors in Indiana, for example) yet apply anyway. Many groups like the NY Angels and Seattle's Alliance of Angels have found that a $100-150 application fee discourages the faint of heart, saving much grief for their staff. Listen to Dan Rosen's humorous account of how they settled on the precise amount to charge their Seattle-based bozos.

Angel groups not charging presentation fees include the Pasadena Angels, Tech Coast Angels, NY Angels, Band of Angels, Alliance of Angels and most others. To find an angel group in your neighborhood, check out the ACEF Listing of Groups.

Jason's received quite a few comments, check out his blog.

What's German for LLC?

How are angel deals done in Bavaria? And how are they different from the US? There's lots of government money available for startups, so that's not the issue, but there are challenges.

We met during the EBAN tour of Silicon Valley earlier this year, so I was eager to renew contact when Michaela Mueller emailed with questions about deal formation. She and Arne Hostrup run Netzwerk Nordbayern in Bavaria, where things are done differently than in the Valley. Some of the issues they have will surprise you, one for example, it's not finding the money.

Show #251 (36:51) Listen

Then I'll be speaking Dec 8th at the Puerto Rico Venture Forum in San Juan. Guaranteed 80 degrees! Registration details.

Stewart Craine and his Barefoot Power are out to eliminate kerosene lamps in impoverished areas and replace them with better and cheaper electric LED lamps. At first I thought such an undertaking might be the focus of a non-profit, but Stewart says "solving energy problems for 1.5 billion people, a $10-30B problem, non-profits just haven't scaled that much". Reminds me of Dan Pallotta's Uncharitable, How Restraints on Nonprofits Undermine Their Potential; listen to my interview with Dan, then I mention M. Yunus' Banker To The Poor: Micro-Lending and the Battle Against World Poverty, but that's not what Stewart's doing either, "close, but significantly different". Listen closely to my first guest in mainland China.

He's partnered with micro credit specialists Oikocredit to create the Barefoot Angels Fund.

Show #250 (29:15) Listen

Join me in Toronto at the National Angel Summit Oct 14th and 15th. Registration details.

Then I'll be speaking Dec 8th at the Puerto Rico Venture Forum in San Juan. Guaranteed 80 degrees! Registration details.

Luis Villalobos has died suddenly after a brief illness.

Often credited as the founder of the Los Angeles-based Tech Coast Angels, Luis Villalobos was presented with the prestigious Hans Severiens Award at the Angel Capital Association's Annual Summit in Chicago in 2007.

Yesterday word spread that he had been undergoing treatment for a yet to be determined lung infection. He's been in the ICU at St. Josephs in Orange since this past weekend. Then tonight at 9pm, incoming TCA Chairman Richard Sudek made the announcement that "he contracted an infection in his lungs and went very quickly". Luis was 70.

Show #249 (56:07) Listen