My sister texted, had I pocket dialed her? Maybe I had, so I enthusiastically called her back. "What's new with you?" Well, I'm doing a webinar on term sheets in half an hour. "Term papers?" No, the agreements angels make with entrepreneurs when they invest in their companies. "Sounds boring."

Indeed. As we say goodbye she suggests, "when you have a dry topic, have a little fun with it. Re-title it 'You Suck at Term Sheets'". Who could argue with that logic? Her brainstorm comes from the infamous "You Suck at Photoshop" video series, "they're informative, but style-wise, it's like going to one of those restaurants where the waiters treat you like crap".

Hmmm... I didn't think there was time for re-branding, but her input raised my spirits. I was now up to the task! And why not? I had a dream panel: Katherine O'Neill, JumpStart NJ, Michael Gruber, Cornerstone Angels, David Rose, NY Angels and James Geshwiler, Common Angels. That's a lot of experience, an embarrassment of riches!

And whattya know? It was great! But you missed it. Don't miss the next one in the ACA Syndication Webinar Series: Due Diligence. I know, sounds dry...

I wrote a check today, the first one in quite a little while, for a new startup here in Orange County. I'll share more details about the company and its great promise in an upcoming post, after the deal closes.

Am I a bellwether of a new season of confidence in Southern California?

Why wasn't I writing checks earlier?

Let's take stock...

In reverse order, I wasn't writing checks for new startups in part because I have a large portfolio of early-stage companies and many of them came back for more money last year in pay-to-play rounds. I had to allocate funds to participate in merit-worthy rounds or else, in most cases, I'd be converted to Common and diluted up to 90%; that's an incentive. I didn't participate in all of these rounds; I said goodbye to at least two of my deals thinking I'd rather invest in something new.

So why didn't I?

Although many angel groups report seeing lower pre-money valuations from funding applicants, here in Los Angeles entrepreneurs were slow to ratchet the numbers down and equally troubling, TCA's pre-Screening committees seemed to think we could negotiate more reasonable valuations later in the process, like during due diligence. This approach had worked since the beginning, but it wasn't gonna work in 2009, because, just like in Real Estate it's said, if a home is priced too high it won't attract many offers. And that's exactly the way I saw it in 2009, deals that were too rich; it was easy to pass.

Am I a bellwether of increased confidence? Maybe, but more importantly, all the pieces are coming together. Here's a deal, let's call it V, with a lot going for it. They've got skin in the game. They've raised a friends and family round. They're coachable. But most importantly, this is a member-led deal. One of our own found this company, invested $50k of his own money and is acting COO, then he attracted another TCA member to act as a part-time marketing consultant for the company. Picture the scene when they appeared at the TCA Screening last month: they look solid. (Of course, from a portfolio perspective, they have a 50-50 chance of being in business a year from now, but still.) The other angels in the room loved seeing this member-led deal and we have our first over-subscribed deal in quite some time.

So listener Nick, when he questions, "Who Wants To Be A Deal Lead?", this is my reply: find an angel and get him involved early. It's not easy, you're right. But later when you advance to meet more angel investors, you'll get a warmer reception. The alternative is to simply apply online and run the gauntlet, but then it's too easy for angels to sit back and be critical. If you can find an angel to join your board and make an investment, that demonstration of confidence will resonate with his angel peers.

Allan May founded the Life Science Angels in 2005 with Casey McGlynn and Greg Scott. As the name implies, they are a niche focused angel group.

Show #286 (18:35) Listen

Meet me in:
UCSF: May 4th I'll speak at the Entrepreneurs' Discussion Series at noon.

San Francisco: May 5-6-7 at the Angel Capital Association's Annual Summit

Watch my presentation in Austin at the Texas Funding Symposium, hosted by Hall Martin and the Central Texas Angel Network. Video courtesy Joshua Baer.

Hi Frank,

A provocative question for you, but one that's emerged from talking with a lot of angels:

Why on earth should an individual angel ever choose to lead a round?

Here in the UK, it seems to be that all the angels left in the game are finally realising that their typical historic exposure to individual investments (say, $50K) is simply too high in anything other than outright boom-time. While it's nice to dream that any individual investment is going to turn out to be an Amazon or eBay, realistically the beta for all of them is just too high for anything less than a portfolio of (say) 12+ investments to make sense.

All of which means that a typical non-hyper-rich angel should put no more than $30K into any one investment target. But at that low level, is it ever really worth the hassle of leading a round?

What I'm finding is that I'm meeting a lot of (for want of a better phrase) "passenger angels" but no drivers: the worry is that, even though this actually makes perfectly rational sense, it yields a kind of "passenger investment paralysis" - everyone wants to invest a bit, but nobody wants to lead. At the same time, nobody wants to come in to a round unless there's a leader.

Surely an absence of round leaders could cripple the angel industry just as much as the unrealistic "10x" spectre has crippled the VC industry?

What do you think?

Cheers, ....Nick Pelling.... // Nanodome Ltd - Surbiton, Surrey, UK

New York UPDATED

I got out Sunday, but John's there til Wednesday. He was connecting through Munich, that's what screwed up his return plans.

We were all talking about our combined misery, this volcanic black swan that has many of my colleagues from the EBAN Congress in Istanbul unable to get home, not right away anyway. John Mactaggart was the first to react; he'd changed his itinerary from west to east and would escape through Dubai into Australia and get home before his original plan. I was reluctant to start over reacting, perhaps things would settle out by Sunday. That's my nature; I'd play it cool.

The Brits were in a pickle. John May was relaying details of Tony Clarke and Kit Hunter Gordon. London was one of the first cities to be closed. Then Phillippe Gluntz showed up; he was off to dinner with his Belgium friends; might as well, Paris was closed. I never heard from Anna Hejka, her return to Poland had more gravity. The state funeral had to be on her mind, of course. Warsaw was closed quickly.

When I bumped into Rene Reijtenbagh he was checking out of the hotel. He'd made a route that he hoped would get him within driving distance, but it would still take days to get to the Netherlands. He was eager to tell of how he'd lost his passport! Which made my problems seem trivial. He had to use the hotel's security cameras to determine that he had returned from dinner with his passport. He found it somewhere in his room. Although he's easygoing, I'm sure the experience left his heart pounding.

Yesterday up on the 15th floor executive lounge John Huston surprised me. I didn't see him when I walked in. He and Liz were heading to Paris for a week, but now that plan was in serious jeopardy. They were gonna head to the airport and get a close look at the situation.

John May and I had planned all long to spend Saturday touring Istanbul. Since I'd been there a week and stayed 4 days across from the Hagia Sophia, I offered to be his tour guide for the day. We spent a carefree afternoon seeing the sites, the Blue Mosque, the Topkapi Palace, the Sophia Museum, and my favorite coffee shop near the Bazaar before finishing up over a beer and a Turkish quesadilla at a funky cafe that sat high above the sidewalks; we could watch the pilgrims heading home. Distracting? As best we could, our travel schedules were weighing on our minds. I was slow to want to depart, our hotel being in an industrial area wedged between a landfill and the airport; soon enough we'd be back. Then it's back up to the executive lounge where the wine pours were generous and free.

As I sat at the computer printing a boarding pass, in walked John and Liz Huston. Seeing them meant they hadn't got out, but they didn't seem phased. They announced a new destination in lieu of Paris. They'd found a route to Barcelona instead. They were all smiles. Liz's only concern: Barcelona would be warmer than she packed for. I suggested a whole new wardrobe to celebrate the serendipity.

That left me and John May. My itinerary was maddeningly devoid of any commentary. The only email stated: "it's time to check in", as if nothing other worldly was happening.

John decided he'd follow the Huston's approach and visit the airport. It was only 1 metro train stop away. I saw him later at dinner. He had a way out, but it was hard to feel so great about it. Wednesday was 3 more nights in Istanbul and he had only been able to confirm one night at the hotel. More concerned about me than himself, he insisted that if I failed to get out to come back to the hotel and bunk in with him; that was a comfort.

He was pleased with the service, even timing the call to United at 23 minutes to get the last seat on a flight to Chicago Wednesday night; connecting to Dulles was easy after that.

As we parted at dinner we said, "see you in San Francisco!".

In the morning I went to the airport. Delta was happy to tag my bag all the way to LAX. I had a ticket. Would there be a plane?

When I got to the gate, there was.

UPDATE: 2pm PDT Monday April 19, 2010 Newport Beach
Spoke to John May via Skype. He's chilling in Istanbul still, waiting for his Wednesday flight out. Anthony Clarke has moved to southern Turkey. John and Liz Huston never made it to Barcelona, nor Paris, but are in Greece.

John looks forward to sharing all these tales of travel woe at the Angel Capital Association's Annual Summit in San Francisco May 5-7. Guarantee: no travel restrictions, so make plans now to attend.

Silicon Valley Bank's Laurie Lumenti Garty is a great supporter of Angel Capital Association. We're both on a committee that's planning the Annual Summit in San Francisco, May 5-7.

Now if I can just get home from Istanbul...

Show #285 (1:02:33) Listen

Meet me in:
Austin: April 21 at the Texas Entrepreneur Funding Symposium.

UCSF: May 4th I'll speak at the Entrepreneurs' Discussion Series at noon.

EBAN's 10th Annual Congress kicks off tonight with a speakers' dinner. It's tomorrow that's got me stoked: I 'animate' the Awards Gala!

These Europeans love to eat late and that's gonna be true tomorrow night in Istanbul after the first day of the Congress and an evening cruise on the Bosphorus we celebrate with awards for several categories including Business Angel of the Year.

Now I know, but that first day I didn't, that the free tour guide of the mosque means a free tour of his Turkish rug shop. I know I got a good deal. Here, you get to see it before Barbara does.

Can a personality test predict an entrepreneur's future success?

The Founder Institute is Adeo's latest project where he's out to mentor startup entrepreneurs. He knows lots of entrepreneurs through TheFunded, his website that aggregates entrepreneur opinions of venture capital firms and angel groups relating to favorable deal terms, pitching efficiency, and after you get funded, execution assistance. It's like TripAdvisor for Venture Capital.

So who's rated highly?
And how does he explain Tech Coast Angels' rating?

See Adeo at the ACA Annual Summit in San Francisco May 5-7.

Show #284 (48:04) Listen

Meet me in:
Istanbul: April 15-16 at EBAN's 2010 Congress.

Austin: April 21 at the Texas Entrepreneur Funding Symposium.

Vegas Valley Angels Chairman William Botts writes: I have received emails from several of you about the status of the Vegas Valley Angels. Instead of one-off responses, let me give you all an update.

In early 2008 it was becoming clear that our group's appetite for new deals was very limited. Over our first five years we had done about 14 deals with a total invested capital of about $12,000,000 (we have recently done a portion of one new local debt deal giving us 15 total companies in our portfolio). Our group which peaked at about 50 accredited investors in 2007 is now at 35. During 2008/2009 our strategy was "stay a live and support our portfolio companies," 12 or which were still alive with a few doing well. This we have done and our revised strategy is to move back into more active operations this year with the focus being on the last half or 2010.

We are having our next member's meeting on May 18th but the full restart is more likely to be in the Fall. In the meant time we have not been soliciting deals directly or via our website. For the May meeting we intend to look at one traditional new deal but would like it to be one referred from one of you. If by late April or early May one of your groups has an active deal that has been vetted and still needs some additional funding, we would be happy to consider it for our May meeting as possible "tag along" investment.

We are starting to recruit additional accredited investors and have a number of interested locals. Our goal will once again be to get to the 45-50 level where we can expect to be successful in leading moderate sized angel deals.

If you see a current investment opportunity that is ready for exposure to our group in May, please let me know and send me a summary so our screening committee can decide if there is a fit and on having them present.

Thanks for you interest in the Vegas Valley Angels

I've learned to like Brad Feld's book recommendations. He's got me reading spy novels again. So when he blathered on about Rework, I had to see for myself. At first flip through the pages I was disappointed to see such short chapters; it looked like a general business guide. I set it aside. But then I had to pack something for Spring Break to New York, I gave it another look and I'm glad I did.

Coincidentally, I'm working with one of the UCIrvine teams in the Business Plan Competition, for the 3rd year in a row, if memory serves. My contribution will kick in when we get past the next round and create the PowerPoint pitch, but first they have to write a business plan. Couldn't I just play along and offer some encouragement, some pearls of wisdom? No, because no one reads business plans, especially angels, even less so VCs, I imagine. Who has the time? And the other problem with plans, they're artificial, academic mad dreamings of the future. But these were just my irreverent conclusions, until I read Jason Fried and David Heinemeirer Hansson's early on chapter, Planning is Guessing.

Now I've learned I'm not alone. "Plans are inconsistent with improvisation."

And, of course, improvisation and thinking on your feet while listening to the customer are what determine success in business. "Start referring to your business plans as business guesses." Then "give up on the guesswork. Decide what you're going to do this week, not this year."

When I speak in Austin later this month I'll describe my software company. I created it with no venture capital, no go to market strategy and no business plan; I'd never even taken a business class. I've often shared this for its shock value, but now I'm starting to see my humble approach as a good one.

Keep in mind, "it's OK to wing it".

I can't wait to read my team's plan...

A finalist last year for EBAN's Business Angel of the Year Award, Ari Korhonen runs Lagoon Capital. Sounds kind of tropical, but although Ari's investment company is surrounded by 188,000 lakes, it's not tropical, it's in Finland. For warmer temperatures he's off to Istanbul where he and I are panelists at EBAN's Annual Congress where we'll gather with angels from Mumbai and Istanbul to discuss: A look back at the last investment year.

Since it's Europe, there's probably some government involvement, so what's the role Veraventure is playing to stimulate early-stage investing?

Show #283 (28:49) Listen

Meet me in:
Istanbul: April 15-16 at EBAN's 2010 Congress.

Austin: April 21 at the Texas Entrepreneur Funding Symposium.

San Francisco: May 5-6-7 at the Angel Capital Association's Annual Summit