the changing nature of angel investing in the bay area (and the syndication opportunities it...
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The Changing Nature of Angel Investing in the Bay Area (And the syndication opportunities it provides) Angel Capital Summit March 21, 2012 Denver. Angel Investing in the Bay Area. Bad Old Days In the last quarter of the last century Between 20 and 30 angel groups - PowerPoint PPT PresentationTRANSCRIPT
www.baeworkshop.com
The Changing Nature of Angel Investing in the Bay Area
(And the syndication opportunities it provides)
Angel Capital SummitMarch 21, 2012
Denver
Angel Investing in the Bay Area
• Bad Old Days In the last quarter of the last century Between 20 and 30 angel groups Ranged from moderately active to social gatherings Met once a month, some charged (a lot) Individuals invested a small amount, usually less than $20k
• In the last 18 months the ecosystem has evolved significantly We will focus on these changes, and the opportunities they
pose
Most Active Bay Area Angel Groups*
Firm $ Invested
# Deals
$ Range Syndicate ?
K-4 (4 chapters) $33M 31 $250k - $3M No
Investors’ Circle $9M NA Max of $5M No?Band of Angels $6.5M 19 $500k Yes?Angels’ Forum $5M 5 $200k - $1M No?Life Science Angels $4.5M 7 $100k - $1M Yes?Golden Gate Angels $2.5M NR $50k - $1M ?
* Data from 2007
New Players in the last 18 MonthsProliferation of New Players
• On-line Angel.co (Angel List) Caplinked Both are loose
communities of accredited investors and entrepreneurs
• Super Angels / Micro VCs Mainly ex-entrepreneurs Who got bought out Invest as individual angels
& in small groups
• New models Y-Combinator BAE Workshop
• Large VC firms Set up small funds to
invest in seed stage, even pre-revenue
What Drove the Change?
• eBay bought PayPal for $1.5B Created excess executives with cash to burn Reid Hoffman started LinkedIn Elon Musk started Tesla and Space X Peter Thiel started investing in start-ups
• Google had an IPO A lot of early employees entered the 1% New angel groups sprouted XG Ventures, XG Silicon Valley, XG North Bay, etc.
• Other IPOs and acquisitions added to the mix
• Suddenly a lot of new faces entered the arena, and some with new business models, too
New Entrants Filled a Void• Most angel groups became more conservative
At least with their tech investments Looked for market validation, or traction Started to look like VCs, but with less money
• Few if any remained true seed-stage investors Created classic Catch 22 for entrepreneurs Can’t get money without customers – Can’t get customers
without money
• Micro VCs & Super Angels filled that void Both invest in pre-revenue companies Form a viable bridge between F&F and Series A
Syndication Opportunities Vary Greatly• Traditional angel groups have limited syndication
opportunities Keiretsu Forum syndicates only with other chapters Most others rarely syndicate outside their organization Of course they may bring in a personal friend Not fertile ground
New Groups Offer Varied Opportunities• On-line
Unlimited ability to syndicate – in principle Most deals gravitate to a few individuals Little screening of start-ups or investors that register I know there must be some good companies there, but I’ve
never encountered one The couple of companies I’ve suggested register, all highly
fundable, went nowhere.
• Big-Dog VC firms New small funds Little data on their syndication habits Less likely to syndicate than with Series A or B – can do the
whole thing themselves
Various Opportunities• Super Angels
Vary in degree of diligence performed More “smart money” than most angel groups Wide open to syndication
Willing for you to invest in their companies Open to investing in your companies
• Micro-VCs Similar in most respects to Super Angels Often from same background They invest other people’s money in addition to their own Similarly open to syndication
Super Angels & Micro VCs• I have found so far 157
• But with more big name IPOs in the offing, likely to be new surges of new angels
• Looks like a growing presence
• Looks like has staying power
• In short, with this group, the syndication opportunities look strong and stable
Super Angels / Micro VCs – a Snap Shot
Company Contact Title E-Mail Focus RangeCamp Ventures
Jerome Camp
Founder [email protected]
Agnostic $500k - $1M
Cardinal Ventures
Christian Borcher
Co-Founder
Wireless, internet SW
$500k - $3M
Catamount Patrick Fitzgerald
Partner [email protected]
Information Technology
??
Crosslink Capital
Jim Feuille General Partner
Energy, IT ??
Defta George Hara
Chair-man
Information Tech
$500k - $3M
Felicis Ventures
Aydin Senkut
Founder [email protected] Consumer Internet
$25k - $100k
Floodgate Mike Maples
Founder [email protected] ? $200k - $500k
Founders Fund
Ken Howery
Managing Partner
Internet $500k - $1M
New Business Models• Screen companies to those that fit the model
• Invest same amount in all companies chosen
• Y-Combinator Restricted, in principle, to start-ups who know what a
Y-combinator does Investments only by the founders and Peter Thiel No opportunity to syndicate that I can see Have produced some real winners
Xobni Dropbox A few others
A combination of micro-VC and super angel
New Business Model• Bay Area Entrepreneurs Workshop
Agnostic regarding technical area and stage Screen companies for ‘fundability’ in two ways
Executive Summaries 30-minute investor pitch w/ 30-minute Q&A
Focused on getting participants funded at VC level Use micro VCs and super angels to let participants get enough
traction to become attractive to VCs Invest same amount in each participant – ensuring our
investors are invested in winners Open to investors from anywhere
• Partnered for success Business Catapult Start-up Weekly LinkSV
Bay Area Entrepreneurs Workshop• Eight three-hour sessions, weekly
Lead attendees in creating all plans and documents needed to secure VC funding
Sessions led by domain experts in go-to-market, marketing, finance, etc. Plus VCs and angels
• We invest $10k - $20k in each company that qualifies for the workshop. We know our investors are invested in the winners
• Post-workshop we match graduates to VCs who invest in their space, at their stage, and in the amount they are looking for
• Based on past results, we expect to get ~ 40% of our attendees funded
• Consequently our investors can expect an increase in value of ~ 5X in a time of 9 - 24 months
Thank You
Ralph PattersonCEOBAE Workshop & Investmentswww.baeworkshop.com925-200-1895