• TCA Press Categories

Page 10 of 14

Tech Coast Angels’ Total Investments Net Higher Returns Than Angel Investment Average

for PR Web, click here

Angel Network’s Realized Multiple and Internal Rate of Return Higher; Hold Period Also More Favorable

IRVINE, Calif.—August 30, 2016—Tech Coast Angels (TCA) today revealed that its performance record is better than the average angel investment in nearly all categories, as compared to an extensive study of returns prepared by Dr. Rob Wiltbank and Professor Wade Brooks for Willamette University and the Angel Resource Institute (ARI) earlier this year. TCA based its 3.3x return as follows:

If a TCA member had invested $25K in all of the network’s 305 investments ($7.7 million), s/he would have so far:

  • Already realized $12 million in cash liquidity events;
  • Taken $2 million of tax-deductible write-downs; and
  • Still have $4.1 million of active investments, which, if the average performance is same as earlier exits/write-downs, would provide an additional $13.6 million of cash realized

…all of which implies a potential 3.3x overall return (not counting tax benefits).

The 3.3x in total investments return surpasses the 2.5x average as listed in the ARI report angel investment averages, as well as in earlier studies. TCA’s IRR (Internal Rate of Return) of 26% and Hold Period of 4.3 years compared to ARI’s measured average of 22% and 4.5 years, respectively.  TCA’s percentage of exits returning less than 1x is marginally better at 68% (the ARI report is 70%). For more information, please visit https://www.techcoastangels.com/performance/.

Of the 305 investments made by TCA since its inception in 1997, 162 (53%) are still active.  There have been 64 exited investments, including 45 that returned at least 100% of the investor’s capital—and 12 returned between 5x and 139x.  For a list of TCA exits since 2000, please visit https://www.techcoastangels.com/exits/.

“We invest across most industries, but so far our success rate has been highest in Financial Services, Life Sciences, BTB and Cleantech/Industrials sectors — all of which have realized over 60% success rates,” said John Harbison, TCA Chairman. “Software is close behind with a 45% success rate. We’ve had two home runs so far with returns of over 110x, and another at 70x.”

August 30, 2016


Who is #LongLA?

click here

August 16, 2016


Tech Coast Angels Seeking Applications for 10th Startup ‘Quick Pitch’ Competition

For immediate release

SAN DIEGO, Calif.—July 20, 2016—Tech Coast Angels, one of the largest and most active angel investing organizations in the United States with more than 300 members in five regional networks, is seeking applications from technology startups for its 10th annual John G. Watson Quick Pitch event being held on October 6, 2016.

Tech Coast Angels, one of the largest and most active angel investing organizations in the United States with more than 300 members in five regional networks, is seeking applications from technology startups for its 10th annual John G. Watson Quick Pitch event being held on October 6, 2016.

Following the receipt of applications, approximately 30 successful candidates will be put through a structured vetting and coaching process beginning in August, with the final 10 competing at the Quick Pitch event. 

“At Tech Coast Angels our goal is to foster the entrepreneurial spirit and promote investment opportunities with significant commercial growth potential,” said Sergio Gurrieri, President of the Tech Coast Angels, San Diego chapter. “Finalists will give a two-minute pitch in front of an all-star panel of judges and 500 attendees. New this year will be audience voting to determine the top three winners, all of whom will be awarded cash and business services as prizes. In honor of our 10th anniversary, we’ve also doubled the cash prize to $30,000.”

The annual John G. Watson Quick Pitch competition is one of the most recognized angel investor events in the nation. It is ideal for entrepreneurs looking to jump-start their ventures and for investors seeking to learn about the latest innovations in Southern California. The event includes time for networking with Tech Coast Angels investors, venture capitalists and the entrepreneurial community. It is also open to all entrepreneurs and companies headquartered in Southern California. Ideal companies are early stage, fast-growing, and focused on developing and commercializing disruptive technologies regardless of their industry.

The event is named after and sponsored by the John G. Watson foundation. John was an active, gregarious and positive influence on local businesses and entrepreneurs through his work with Tech Coast Angels. 

Quick Pitch will take place October 6, 2016 from 6:00 p.m. to 9:00 p.m. at the Irwin M. Jacobs Qualcomm Hall, 5775 Morehouse Drive, San Diego, CA 92121. 

Please contact Ashok Kamal for information on how to apply, attend and/or sponsor the event at Ashok(at)techcoastangels(dot)com 

 

July 20, 2016


Cognition Therapeutics Receives Prestigious Luis Villalobos Award from Angel Capital Association

Named after Tech Coast Angels’ inspiring co-founder, the annual award goes to most outstanding and innovative early stage  company

May 18, 2016 – IRVINE, Calif. – Tech Coast Angels (TCA) today announced that the Angel Capital Association (ACA) had awarded the Luis Villalobos Award to Cognition Therapeutics at the annual ACA Summit last week in Philadelphia.

The award recognizes the single-most ingenious and innovative company that is financed by one of ACA’s member angel groups. It is the highest honor available for an early-stage company to receive from the Angel Capital Association, and honors Tech Coast Angels co-founder, Luis Villalobos.  Mr. Villalobos was a leading light in the angel investment field, by educating and mentoring numerous entrepreneurs and making nearly 60 personal investments, prior to his death in 2009.

Members in all five of TCA’s networks, as well as TCA’s ACE Fund 1, have invested in Cognition Therapeutics.  The company, based in Pittsburgh, focuses on the discovery and development of small molecule therapeutics targeting the toxic proteins that cause the cognitive decline associated with Alzheimer’s disease and other human neuro-degenerative diseases.

“Of all of our TCA Portfolio companies, Cognition Therapeutics is one of the most responsible and transparent companies that our members have invested in,” said John Murphy, TCA’s deal lead for Cognition Therapeutics. “Their science has continuously advanced at a rapid and successful pace. They regularly update us on their progress, apprising us of Cognition’s status as well as the industry’s. Several times a year, every year, they host conference calls so that we stay current on how they are doing. They then follow up with face-to-face meetings with all our chapters. They are a prime example of what an Angel Syndicate investment should be, and to date all of their funding has been through Angel groups.”

Other winners of the Luis Villalobos Award include RetroSense Therapeutics (2015), EyeVerify (2014), TRX Systems (2013), AssureRx (2012), Quantum Dental Technoloiges (2011) and Modumental (2010-inaugural year for the award).

May 19, 2016


Trends in angel investing

TCA mentioned as one of the leading angel groups — click here

May 16, 2016


7 Tips for Raising $39 M from 350 Angels by Rob Neville of Savara

7 TIPS FOR RAISING $39M FROM 350 ANGEL INVESTORS BY ROB NEVILLE OF SAVARA

Rob Neville, CEO of Savara Pharmaceuticals raised over $39M from 350 Angel investors, representing 30 Angel groups from around the world. Neville believes that there are hordes of wealthy individuals looking to invest their money in promising startups. Most startups generally reach out to venture capitalists (VCs) for later stage funding, so it was unusual and historic to raise this level of financing from Angel investors. Savara never specifically eliminated VCs as a potential source of financing, but the momentum within the Angel community simply carried them further than expected. Neville shares his experience with raising Angel funding.

1.      Scale from Angels to Groups to Networks

Raising meaningful amounts of capital from individual Angel investors is time consuming, and simply does not scale. At some point Angel groups become an essential part of fundraising, where 20-50 angels meet on a regular basis to collectively evaluate deals. Even Angel groups have their limitations, and Angel networks are the next logical step. Angel networks contain many affiliated Angel groups often spread around the globe sharing deal flow. In most cases, candidates will pass screening and diligence only once for the first group within the network. For the follow on presentations, the screening and diligence details are shared throughout the network. Essentially, the candidate can skip the screening and due diligence process and access more investors quickly. Examples of Angel networks include the Keiretsu Forum and Tech Coast Angels.

It’s important to have a healthy pipeline of Angels, groups and networks, considering it takes two to three months to move through their respective processes, and even the best companies will face rejection.

Key influencers exist within each Angel group; opinion leaders that are active and well respected by their peers. This is somewhat akin to influencer marketing in social media, whereby individuals are targeted given their influence over potential buyers. CEO’s should work hard to identify and establish ongoing relationships with these key influencers within each Angel group. In more than one case, key influencers became evangelists for Savara, raising millions from their respective networks.

2.      Tell a Compelling Story

Raising money from Angel groups is competitive, and the companies that win are those that tell the most compelling story. Plan to focus less on the details and data – this will surface during the due diligence process. Neville suggests following a Ted Talk format and encourages CEO to practice their pitch over and over until it is perfected. In this regard he refers to Steve Jobs who would practice his story for two full days before keynote presentation, asking for feedback from product managers in the room. For 48 hours, all of his energy was directed at making the presentation the perfect embodiment of Apple’s messages. Practicing the pitch is paramount so that the flow is seamless and the story takes a meaningful form. Ideally the presentation should be graphically appealing, without the use of bullets.

3.      Be mindful of non-Economic Motivating Factors

“Do a little Good, make a little Money, have a little Fun.” Neville uses this to describe the drive behind Angel investors. While the economic return is an important motivator for Angel investors, it represents only one facet of attractiveness. CEO’s must be aware of the non-economic motivating factors that drive Angel investors decisions, often referred to as altruistic and hedonistic motivations. Altruistic Angels have a concern for the well-being of others, and wish to feel good about their allocation of funds. They will invest in stories that resonate emotionally, that help society in one way or another. Hedonistic Angels wish to get involved and be a part of an exciting growth story – leveraging their hard earned wisdom. They will invest in companies that are open to their input and participation. A compelling story must address economic, altruistic as well as hedonistic interests.

4.      Align Management with Angels

Neville stresses the importance of the alignment of Angels’ interests with those of the executive management, so that they all rise or fall together. He opens his presentations by mentioning that he has been part of successful exits that raised Angel funds and returned money to the shareholders. He then makes it clear that he and his team and board have invested meaningful capital into Savara. Alignment is influential because it shows the Angels that you will treat their investment as your own. Angles appreciate a team that sacrifice and operate frugally maximizing value creation with each dollar.

5.      Get ahead of the Due Diligence

Angel investors are accomplished and extremely busy people. Successful fundraisers keep the investment process simple and as straightforward for investors as possible.

Typically, a CEO will present twice to any one Angel group before receiving funds – the first time to motivate and assemble a due diligence team, the second time to communicate the results of the due diligence and hopefully collect investments. Candidates can alleviate work required by the due diligence team by completing a draft of the diligence document ahead of time. If a company relies on preparation of the diligence report from scratch by the Angels, it will take two to three months. Some companies with great stories never get a final due diligence report – often due to competing commitments of the due diligence team members. Even when the Angels are actually doing the work, the majority of the information comes from the company anyways – organizing it beforehand takes out most of the work for the Angels leaving them to validate the report and augmenting it as needed. Ideally, having one or more existing or prospect investors own the draft diligence report as their own adds credibility.

6.      Communicate Often

Given Savara’s large investor base, investor relations is critical. A large investor base is often perceived as a liability or overhead, however, Neville views his investors as an asset. By communicating proactively and often, the Angels will be more likely to participate in follow-on rounds. Savara generates a detailed quarterly report, and holds quarterly shareholder meetings. All email correspondence is personalized. A positive and consistent flow of news generates excitement and confidence in the team’s ability to execute.

In Savara’s $10M Series C round, a DocuSign was sent to shareholders asking for their electronic consent (a necessary step before a round of investment can begin). Within this electronic consent, shareholders were given the option to participate in the round (by simply clicking a radio button and entering the desired amount). Within a few weeks, $6M was committed electronically from existing shareholders.

7.       Close Prospects as Expediently as Possible

The closing process from presenting your story to an Angel group to money in the bank must be as streamlined as possible. Angels have many investment opportunities, and their enthusiasm is likely to fade quickly after hearing your story, however compelling. Leveraging the sales funnel metaphor, prospect investors (those that express interest) must be converted into shareholders in a well-defined and expedient sales process.

To be effective, Neville found that the sales process needs some form of closing pressure (or possibility of loss pressure). This is naturally created when most of the funds have already been committed and the round is about to end. Breaking a larger round into smaller rounds (or tranches) creates multiple points of closing pressure. One additional technique is to offer warrant coverage for early investors. For example, in Savara’s Series B round, the initial investors received 12% warrant coverage – this warrant coverage declined by 2% every month thereafter. Without some form of closing pressure, Angels will not feel any sense of urgency to commit.

Assuming some form of closing pressure has been created, prospects should be encouraged early to “reserve” a place in the offering while they complete their due diligence (without any obligation). Neville will ask early for a verbal range of interest. Once a number or range has been provided, these prospects become “soft commitments”. Accumulating soft commitments quickly helps create additional closing pressure.

As soon as a “soft commitment” has been made, attention moves towards getting signed documents and converting prospects into “hard commitments”. It must be emphasized that a “hard commitment” does not come with the expectation of funds transfer – this will happen later. Neville makes it easy for the investor to sign the documents by using pre-filled DocuSign forms.

After receiving a “hard commitment”, a funds transfer email is sent. Collecting funds should also be as simple as possible, with various funding options being made available. In the early days, Savara team members would literally collect checks by hand. Upon receipt of the funds, the prospect is officially welcomed as a shareholder.

May 9, 2016


Zombie Companies Don’t Have to Haunt Angel Investors

Zombie Companies Don’t Have to Haunt Angel Investors

Tech Coast Angels Create Lost Causes Fund So Members Can Capture Tax Loss

IRVINE, Calif. — May 6, 2016 – Tech Coast Angels has launched an innovative way in which the angel network can assist its members realize tax losses at Zombie companies (companies that have essentially shut down but have not dissolved). The new approach will be announced at the Angel Capital Association Summit next week in Philadelphia.

One of any angel investor’s biggest challenges is what happens when an investment turns essentially worthless, yet the company does not shut down or claim bankruptcy. This can happen either due to struggles in the company’s business, or through a recapitalization of the equity of the company.  Without a document of dissolution, an angel investor cannot declare a tax loss, and the injured startup continues to haunt the investor’s bottom line. While there have been solutions (such as selling holdings to a friend for $1), those answers seem complicated, involve extensive paperwork–and, in reality, most angels don’t pursue them.

“TCA’s Lost Causes Fund provides our members with a solution to these moribund startups on life support,” explained John Harbison, chairman of Tech Coast Angels. “Members can sell shares of a Zombie company to TCA at $1 per holding, which gives them a legitimate tax write-off, since the transaction is documented and irreversible.”

This allows TCA’s members to accelerate recognition of their losses and improve returns.

The Lost Causes Fund is available only to members of Tech Coast Angels, and the holding must be in a TCA Portfolio company.  Should there be a “Lazurus” resurgence of the company and an eventual gain, the angel network will donate any net proceeds for charitable purposes to support entrepreneurship.

Mr. Harbison will discuss the details of TCA’s Lost Causes Fund at The Angel Capital Association Summit in Philadelphia.  His presentation is scheduled for Tuesday, May 9 at 11:00 am.  Mr. Harbison is also available for interview before and after the ACA Summit.  Members of media attending the ACA Summit may also request an interview.
About Tech Coast Angels:

Tech Coast Angels (TCA) is one of the largest angel investment groups in the US.  The group comprises over 300 angel members with experience spanning all aspects of successful leadership in almost every industry in five networks that encompass Southern California.  TCA is the leader in providing funding, guidance, mentorship and leadership experience to early-stage, high-growth, exciting companies in Southern California.  CB Insights has ranked TCA ahead of all other angel groups as the strongest network in the country.

Since its founding in 1997, Tech Coast Angels have invested over $176 million in more than 300 companies and have helped attract more than $1.5 billion in additional capital/follow-on rounds, mostly from venture capital firms. For more information, please visit www.techcoastangels.com.

###

May 6, 2016


Tech Coast Angels Invested $13.5 Million into Startup Ecosystem in 2015

Southern California Angel Network Realizes Fourth Highest Investment Total in its 19-Year History

IRVINE, Calif. – February 29, 2016 – Tech Coast Angels (TCA) invested $13.5 million in a total of 58 companies in a diverse mix of industries in 2015. In addition to the $13.5 million of direct investment by TCA or its ACE Fund, the angel network also helped companies in its portfolio obtain $82 million through additional funding sources in 2015.

The angel network’s total direct investment for the year was slightly off its record $16.7 million year in 2014, consistent with the market slowdown in investments towards the end of 2015. The only other years in which TCA exceeded 2015’s total for investments were in 1999 ($16.3 million) and 2013 ($14.9 million).  Investment in new companies was 35% of the total last year, compared to 41% in 2014 and 63% in 2013.  Please see TCA’s 2015 year-end report for further details, a summarization of 2015, the outlook for 2016, and charts that segment TCA’s investments by industry.

“Notwithstanding the turmoil in financial markets in the latter part of the year, our numbers for 2015 reflect our confidence in adding value to innovative, early-stage companies—as well as expansion investments to our existing portfolio companies,” said TCA Chairman, John Harbison.  “Tech Coast Angels remains one of the largest and most influential angel networks because of our commitment to solid and collaborative relationships within the investment and entrepreneurial communities.”

The angel network also had six exits in 2015, including two successful IPOs (Mindbody, CytomX) and) and four acquisitions (CRISI Medical Systems, Olive Medical, Thermark and Wispry). This brings the total exits since the network’s inception in 1997 to 60.

“Early-stage investing is often a long-term commitment, and Tech Coast Angels members remain steadfast in providing support, both financially and experientially, to early-stage, high-growth companies—especially those in Southern California,” continued Mr. Harbison.  “We are looking forward to continuing our success in 2016 with our existing portfolio companies and by encouraging new young companies with great ideas.”

About Tech Coast Angels:

Tech Coast Angels (TCA) is one of the largest angel investment groups in the US.  The group comprises over 300 angel members with experience spanning all aspects of successful leadership in almost every industry in five networks that encompass Southern California.  TCA is the leader in providing funding, guidance, mentorship and leadership experience to early-stage, high-growth, exciting companies in Southern California.  CB Insights has ranked TCA ahead of all other angel groups as the strongest network in the country.

Since its founding in 1997, Tech Coast Angels have invested over $176 million in more than 300 companies and have helped attract more than $1.5 billion in additional capital/follow-on rounds, mostly from venture capital firms. For more information, please visit www.techcoastangels.com.

February 29, 2016


Tech Coast Angels Releases Annual Report on 2015

For a copy of the report, click here.


2015 Tech Coast Angels Chairman Michael Green Recently Shared His Views about Angel Investing

2015 Tech Coast Angels Chairman Michael Green Recently Shared His Views about Angel Investing:

  • Why Run-of-the-Mill Angel Investor Articles about Returns are Annoying and about Redefining Success
  • Angel Traits and Experience Gained
  • Why to Trust the Wisdom of an Angel Network
  • The Real Life of an Angel Investor (hint: it’s nothing like Shark Tank)

See the PRWEB’s write up here. Mr. Green’s article is posted in its entirety below.

Read More

December 21, 2015


Tech Coast Angels Reports Positive Exits, Eight Deals in Q1 2015

Irvine, Calif. – May 1, 2015Tech Coast Angels (TCA), one of the largest and most active angel networks in the United States, today announced its members realized two successful exits and invested in eight new and follow-on deals in the first quarter of 2015.

 TCA’s collective membership includes nearly 300 experienced, C-suite professionals from nearly every industry sector.  The influential angel network spans five networks throughout Southern California (Orange County, Los Angeles, San Diego, Santa Barbara/Westlake and Inland Empire).

“TCA continues to be a dominant source of funding for Southern California entrepreneurs, with our network’s members providing financial and experienced support to exciting, early-stage companies,” said TCA’s 2015 chairman Michael Green. “We are encouraged with the mix of deals, successful exits and upcoming deals, and we are looking forward to another great year.”

Positive exits for Q1 2015 included Olive Medical and Thermark. 

The funded companies for the quarter are: Groundmetrics, ImmunoGum, iPourIt, Pediatric Biosciences, Playlist Media, Schlep & Fetch, Spine Innovation and Twigtale. 

May 10, 2015


Tech Coast Angels Invested Best Ever $16.37 Million in 2014

Southern California Angel Network Surpasses Previous Records for Both Investments and Activity

IRVINE, Calif. January 29, 2015 Tech Coast Angels (TCA) invested a total of $16,373,337 in 61 total deals in Calendar Year 2014. The angel network announced that 2014 was the most active year since the networks inception in 1997 for number of deals funded, and capital raised was also the largest ever. TCAs five networks throughout Southern California invested in a variety of industries last year, including consumer goods, healthcare, biotechnology, HIPAA-compliant data storage, social networking, organic agriculture, and automobile technology.In 1H 2014, TCA investments totaled $6,321,874 in 27 total deals. 2H 2014 saw a nearly 60% increase in the amount of total investment from the first half of the year, with $10,051,463 in 34 total deals. Compared to 2013, the angel network increased its total investment portfolio by nearly 12%, from $14,639,612 million in 2013 to $16,373,337 in 2014.After four successful exits in 2013 (Cognition Technologies, Green Dot, Lend Amend and Trius Therapeutics), 2014 brought five more positive exits with AIRSIS, Allylix, Bluebeam Software, Hookit (formerly Loopd Networks), and Mindbody Software. TCAs portfolio of new deals for 2014 include: Aggregage, Apeel Sciences, Ascendant Spirits, Beacon Healthcare, Edufii, Fusion Brake, GoBookIt, ImmunoGum, iPourIt, LeaseLock, Neural Analytics, Parcel Pending, Perfectna, Portfolium, Respiratory Motion, RetroSense Therapeutics, Ring Router, Schlep & Fetch, Soma Bar, Spine Innovation, The Influential Network, TrueVault, Unlicensed Chimp Technology, and WeGoLook. “We are excited by the quality and unique breadth and scope of these great, young, mostly Southern Californian companies that we can support through our experience and capital, said Michael Green, TCA incoming chairman. “We look forward to continuing to find, hone and cultivate the many outstanding early-stage companies in our community in 2015.

February 1, 2015


Tech Coast Angels Announces another Successful Exit – Airsys, Inc.Acquired by Oceaneering

 

 Tech Coast Angels (TCA), the nation’s largest angel investor network, today announced that it has realized a successful exit from AIRSIS, Inc., a diversified technology company that develops software and hardware solutions with a focus on web-based satellite tracking and monitoring technology for energy and transportation industries.  AIRSIS was recently purchased by Oceaneering International, Inc. (NYSE:OII).

“TCA helped launch AIRSIS and guided the company as it evolved and developed applications targeted at energy and transportation companies,” said Ralph Mayer, chairman emeritus of Tech Coast Angels, San Diego and former chairman of AIRSIS. “AIRSIS was an early innovator in ship tracking technology, creating the company’s PortVision® product line, which is becoming a standard in the marine industry and is used by all the major oil companies to improve the efficiency of their marine terminals at oil and gas refineries.”  

TCA led two essential early investments which helped transform AIRSIS as it began as a young custom software development company working on a number of location-based applications using satellite technology. Additionally, TCA’s investment helped to fund the development and marketing of AIRSIS’ PortVision®, a SaaS product for vessel tracking in the maritime industry.

 “My experience with Tech Coast Angels was a textbook case of the power of the angel investment model,” said Dean Rosenberg, president and CEO of AIRSIS. “TCA led $2 million in funding for my company, which is an amount that is difficult to get from other sources. Individual TCA members also stepped up at different times to provide debt financing when needed.  I received valuable advice and mentoring from the TCA-appointed board member, and other TCA investors who regularly supported me with business development and general business coaching. As we now celebrate a successful liquidity event, the partnership was truly a win-win for all.”

For more information about AIRSIS, visit http://www.airsis.com

November 10, 2014


I Believe In Angels

Jeff Draa – President of SD TCA

My colleague and friend Jeb Spencer recently wrote a piece for Xconomy about angel investors looking for “Unicorns” those rare early stage companies with valuations—justified or not—of $1 billion or more. He wondered if angels are flying too close to the sun by misunderstanding their chances of success and failing to do their homework on deals—and perhaps pumping up company valuations in future rounds.

He’s right in one respect. Many angel investors, especially “super angels” do indeed selectively shop for that home run deal, relying mostly on their intuition, judgment, and what they consider to be their deep knowledge of technology and understanding of people. This methodology contrasts sharply with the heavy lifting that angel groups like ours do, which involves thoroughly researching each startup and its team, technology, and market.

Many super angels believe they are smart enough to pick the winners. Many simply have more money than time, and they don’t want to bother digging into the dirty details of every deal.

Angel investing is an important part of the financing that serves startup companies. They help bridge the critical gap between the entrepreneurs’ savings (usually running out somewhere around $50,000 and $150,000) and the first venture capital round (usually above $2 million). Angels and angel networks are also an integral part of the local startup community, making investments and helping entrepreneurs.

Of course, many startup businesses fail. But this happens regardless of the source of capital. Many of the most successful growth companies were founded by entrepreneurs who had already been through at least one failed startup, learned their lessons, and tried again. In such cases, angel investors often provide the crucial support that institutional investors are unable or unwilling to make. We get entrepreneurs through the Valley of Death.

Yet it’s important to distinguish between super angels and angel networks. Most of the organized angel networks do a good bit of work to deeply understand the investments they are making, as well as the risks they take.

In San Diego, for example, our Tech Coast Angels group has a team of analysts overseen by a volunteer member, and they perform our due diligence. These are highly educated people, most with graduate degrees, who produce research that we consider to be critical in our decisions about who gets funded. I read one of these reports this morning that was 95 pages long, a fairly typical length for our group. If we fund a startup, we share our research with the founding entrepreneurs, and this is very valuable to them.

Angel investors, both individually and through networks, invest about the same amount in the startup ecosystem from year to year. Last year the total amounted to about $24 billion —and was roughly equal to the total invested by VCs in 2013. From this perspective alone, angels are a critical piece of the economic generator that is our capital system. And the importance of angels goes way beyond the money.

A recent study by the Keck Graduate Institute shows the impact the Southern California Tech Coast Angels have had on the regional economy. Their findings include:

—Southern California’s Tech Coast Angels have invested over $130 million in startups across a region that extends from San Diego to Santa Barbara.

—Of our portfolio companies that are still active, 85 percent remain in this region, creating an “anchor effect” for local economies.

—Those companies have a combined annual revenue of $990 million and employ over 4,500 people.

From the impact in this region, imagine the total impact that all individual and networked angel investors have nationwide.

Amid speculation about a “pending vaporization,” Spencer asks, “What will become of all these companies?”

My answer: The same thing that always happens in a down market. There will be a shakeout of winners and losers. The talented entrepreneurs among the losers will dust themselves off to make another go at it—sometimes with angel money—and some will become winners in the next cycle.

The “great winnowing” of startup businesses that Spencer describes is a fact of life for all entrepreneurs and investors. This is the way of business creation in our system. And it works.

All the investing entities in the U.S. startup ecosystem are there for a reason. We all have a part to play, and we all support this incredible engine of growth and opportunity. My advice to entrepreneurs is to take advantage of the available capital that makes the most sense for you at the time you need it. And my advice to investors is to do your homework.

@Xconomy: http://www.xconomy.com/san-diego/2014/10/30/i-believe-in-angels/ 

November 3, 2014


An Insight of Getting More Than Just Funding From TCA

An Inside Look into Tech Coast Angels with JohHarbison

Last Wednesday, Tech Coast Angels hosted its Orange County Entrepreneur Mixer and invited many local entrepreneurs to talk with many of our TCA investors. Those in attendance also had the chance to witness a 2-minute pitch contest in which about a dozen or so companies had the opportunity to get direct feedback from many of our TCA members. Orange County Chapter President John Harbison had a few words to say before the festivities started and was glad to sit down for an interview about what TCA is trying to accomplish in southern California.

Tech Coast Angels is a collection of 300 individuals who have had success in their careers in various ways, many of which have come up through entrepreneurial experiences themselves,” Harbison states. “We work together to give back to the community in terms of trying to foster more innovation and more companies to be successful in the future.”

TCA wants to not just be viewed as the “money” to entrepreneurs, but as a network of highly knowledgeable professionals who seek to foster entrepreneurial passions and provide guidance towards success. Such guidance can include leads to better opportunities, extensive networking, workshops, and even one-on-one counseling. Harbison stated that TCA would even go so far as to direct them to other investors if it is in the best interest of that particular entrepreneur.

Since TCA has over 300 members stretching from the Los Angeles down to San Diego, it is fair to say that Tech Coast Angels is the largest network of angel investors in the United States. The sheer size of TCA’s network makes it likely that there will always be a member somewhere that has expertise in any given field or industry. This vast ocean of different expertise allows TCA to invest and foster startups in virtually any industry, whereas many other angel investor groups tend to stick to just one or two industries with which they are familiar.

Harbison adds “We can cover a lot of different industries, where as a small group doesn’t have the breadth of experience…it tends to help us make better decisions on what to fund, but it also helps us in adding advice and council for companies as we go along.”

Even though TCA is very large, don’t let that make you think they don’t invest plenty around southern California. According to Harbison, “We have invested in 260 or so companies in the last 17 years and we’ve put about $150 million into those companies, plus another $1.6 billion into them from follow on investment from other later stage investors. We may see over 200 companies in a year, and of those 200 that get to a screening, we’ll maybe invest in about 20 of those; of the 90 percent that don’t get funded, we try to leave them better off.”  

If there is one thing to take away from Tech Coast Angels, it is that they are there to make you better than you were before you came, offering advice and council whether or not they provide funding. Heck, they may point you in a direction that will get you funding eleswhere if not by them. How many investor groups will do that for you?

October 26, 2014


Page 10 of 14