How do angels fit into clean tech? Solar? Is it too capital intensive for angels? I ask Wellington Partners' Ram Srinivasan his opinions. We met during EBAN's tour of the Valley last month.
He was an engineer then moved into marketing, eventually becoming an entrepreneur with a taste for risk, but once he was pretty comfortable at HP.
Show #233 (39:56) Listen
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My keynote may have surprised the local politicians in the audience: "Relocation Recommendations: Where to Find the Money", but not those of you who listened to Liddy Karter talk about her efforts to influence public policy for angel investors.
I shared the highlights from Liddy's remarks, so we'll see if these entrepreneurs in attendance pack off for Honolulu or Milwaukee to find more welcoming tax policies and therefore more investment dollars.
Could you use a tax break?
Do you feel that your early-stage investments are good for the economy and should be encouraged?
So does Liddy Karter.
Sandwiched between Boston and New York you'll find the Angel Investor Forum in Connecticut. Liddy sees a lot of activity in both cities and it's led to a year where "we've invested more in 2009 than ever before!". You haven't heard that on the show lately, so who better to be leading the Angel Capital Association's Committee for Public Policy?
Another $30 billion for General Motors as they enter bankruptcy, unbelievable! What would $1B do if it were spread around to angel groups? Liddy can imagine, but is anybody listening? Not in Connecticut according to Liddy. Instead head to North Dakota, Hawaii or Maine for the best tax incentives for angels. And what has Wisconsin done to earn her vote for the strongest example of public policy effectiveness?
Save the date: check out Liddy's New Angel Summit (angels from New Jersey, New York, and New England in New Haven, get it?) September 17th.
Show #232 (25:38) Listen
]]> EventsWe found the perfect interface between the 2 organizations; there's a PreScreen review in the TCA process, companies that pass this evaluation will be invited to present to the local group of angels. This is the perfect time to refer the entrepreneur to TriTech where they could get much practical advice and practice pitching. Later, several more TCA members would join TriTech as paid consultants; who better to work across the table from the fledgeling entrepreneur? Then along came new conflict of interest guidelines; there was sensitivity that perhaps board members and the TCA members acting as TriTech consultants would benefit personally from the expenditure of SBA funds for consulting the entrepreneurs.
At first I bristled at the new restraints: "you wish there was more funding and more of a conflict of interest", but over a few days I've had time to consider the potential for a perception of conflict of interest and as recent posts on this blog have shown, personal integrity is essential to a healthy ecosystem for funding new startups. So last night I forwarded my resignation to Mark Mitchell, TriTech's Executive Director. We can still collaborate on individual projects and we'll meet for those occasional cups of coffee, but my term on the Advisory Board is over. Good luck TriTech.
]]>I'll be a judge at the Orange County Fast Pitch hosted by the Tech Coast Angels at UC Irvine at 5:30pm on Tuesday June 9th. Twelve entrepreneur finalists get 90 seconds to pitch to a jury of angels and VCs with hundreds of onlookers in the audience; it's always lots of laughs and educational, too. The winners get to pitch the angels for real.
Then at noon on June 11th I'll be the keynote speaker at the Orange County Business Growth Forum at the Digital Media Center in Santa Ana. Join me.
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Alana Semuels reports in the LA Times: Startup funding scarce. Who was to blame?
He was someone I met outside my usual trusted sources, but here I was Vice Chairman of a new nonprofit whose goal it was to promote Orange County to the world. This was an honorable undertaking, like motherhood, so my guard was down. Who would expect to find a scam artist here, let alone our illustrious Chairman? The rest of the board was a group you could trust; it included the incoming chairman of the Orange County Business Council, Tom Phelps, Toshiba Senior Vice President Chris Harrington, and many other local luminaries, a virtual who's-who in Orange County.
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I'd been warned, but I chose not to listen; I had my own personal interactions with John P. Garcia, founder/President of Angel Strategies and Chairman of Orange County Innovation. I liked John, looked up to him. He had his own firm and we were both operating in the realm of finding investors for early stage high tech companies. John had placed The Venture Alliance's Elliot B. Reiff on the board, too, and we all seemed to hit it off.
I was operating through Tech Coast Angels and was about to learn that the business ethics that I took for granted in TCA were not the way everyone operated. Others would lose more money than I did. When I heard from Hattie Bryant and her misadventures with Garcia I encouraged her to take the story to Alana Semuels who reports in today's Los Angeles Times that the hope of attracting venture capital allowed Garcia to ply fees and equity from many unsuspecting entrepreneurs.
Myself, I was too jaded. Losing money on early stage deals happens all the time, even though Otra Beer broke all records for failing quickly. I wrote the check in the Spring of 2006 and by October the founders sent an email announcing the company's imminent collapse. It was only $20,000, but the poor timing of my investment made me suspect others must have known it to be more risky than I did; Elliot Reiff and John Garcia would've known. I sent Elliot an email saying something like, "wow, that happened fast!". I received no reply and have never seen or heard from him again.
In one of my earliest meetings with John he invited me to an event at the Queen Mary in Long Beach, "the Otra Beer girls will be there". That sounded more interesting than many of the deals I was working on. And alcoholic beverage deals get a lot of investor attention, and not just because of the free samples. There are lots of potential acquirers, sometimes for big exits, like when Bacardi bought Grey Goose in 2004 for $2 billion. At TCA we often see alcoholic beverage deals. So when John and Elliot had pumped the opportunity, Otra Beer appealed because it was more mature, a company looking for a B-round. Angels see many early stage deals looking for an A-round, but many of these deals, more than half, will never get to a B-round. That's the risk that's part of angel investing.
But before the beer went flat my relationship with Garcia was long over. There were too many promises he was making to Orange County Innovation, empty promises. So I approached the board, one member at a time; many had their own concerns about his integrity. After making my case the board gave me authorization to ask John to go away quietly, no hard feelings, but he rejected that offer and used all his charm to appeal. Eventually the board relented; what nonprofit wants conflict? But it was a decision I couldn't live with, so instead I resigned.
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Ever wanted to hear how angels think of the terms they offer and the returns they expect? And what will happen if the outcome is less than a complete success? That's what Angel Capital Association Chairman John Huston shares.
Today, it's a working session. Download John's 10 Exits, Generic Term Sheet and Term Sheet Checklist then follow along with his candid commentary on setting expectations. Besides being Chairman of Angel Capital Association, he's developed these documents for the deals he does at Ohio TechAngels.
Show #231 (45:58) Listen
Events: the Tech Coast Angels host Fast Pitch at UC Irvine, June 9th.
]]>socalTECH's Ben Kuo reports on the reaction to this drop in Los Angeles.
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Our busy tour of the Valley winds up with a visit to Silicon Valley Bank where we meet up with ASTIA's Sharon Vosmek, Golden Seeds' Jo Anne Miller, Life Science Angels' founder Allan May, Sand Hill Angels' Jim Connor and SVB's Laurie Lumenti Garty. After lunch we get a technology briefing at Microsoft then 
end the tour with Ian Sobieski and the Band of Angels at the Los Altos Country Club.
Couldn't make it to Stanford this week for the EBAN tour?
Join us for this session when the European Business Angel Network's tour of Silicon Valley meets up with Garage Technology Ventures' Bill Reichert. EBAN Managing Director Claire Munck has teamed up with Stanford's Burton Lee to create a whirlwind tour of the university and the local angel and venture capital highlights. This morning it was Bill's turn to present.
Listen for his comments about breaking even, "which almost never happens, versus controlling your own destiny". With a little prompting from the audience he shares his ideas on "patterns of failure" as it relates to investing in early stage startups.
Show #230 (1:12:08) Listen
It was only weeks ago I was in Madrid for EBAN's 9th Annual Congress where I made a lot of new friends in the European Business Angel world. 
So when EBAN Managing Director, Claire Munck, asked if I'd like to tag along when 12 angels toured Stanford and the Silicon Valley for 3 days, how could I say no? So here I am in the Valley.
Claire, together with our local host, Dr. Burton H. Lee of Stanford's School of Engineering, have coordinated a jam packed schedule. Over the course of these 3 days we'll visit with Siemens' Stefan Heuser, President of their Technology-To-Business Center, Kauffman Fellows Program President, Phillip Wickham, attend a mini-summit on Europe-US Angel Investor Networks at Stanford, visit the PlugandPlay Tech Center incubator, visit Microsoft, meet Garage Technology Ventures' Bill Reichert and Wellington Partners' Ram Srinivasan, and too many other activities to mention. Plus, I'm meeting many future guests for the show!
Do west coast angels pay more?
Are New Yorkers more financially conservative?
The rivalry on the coasts will go on, but one thing is certain, the New York Angels are paying less when they're investing in early stage deals right now. "The valuations sound outrageous to anyone raising funds three or four years ago."
David's the founder of the New York Angels, Angelsoft and The Incubator at RTV. Is anyone doing more to promote angel investing and entrepreneurship?
Show #229 (37:58) Listen
It's Fast Pitch season!
Jump on the Inland Empire's event May 14th at the Hilton Ontario Airport. Then in Orange County at UC Irvine on June 9th.
It was nice to catch up with Permjot Valia in Madrid last week; he's the London-based Business Angel blogger. Now he announces his first angel investment in a year. Why now? Is it the bottom of the market? He says so. Read more...]]>