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.
November 3, 2014
An Insight of Getting More Than Just Funding From TCA
An Inside Look into Tech Coast Angels with John Harbison
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
Tech Coast Angels Among the Most Active Angel Groups Nationwide Again In Q2 2014
Tech Coast Angels Among the Most Active Angel Groups Nationwide
The Halo Report is a research series that highlights angel investment activity and trends in the United States. It is a collaborative effort by Silicon Valley Bank, Angel Resource Institute, and CB Insights to provide entrepreneurs and investors with the information they need to better understand angel investing and emerging businesses.
The Halo Report Q2 2014 has found Tech Coast Angels to be among the most active angel groups nationwide. California also maintains its place as the most active state with a total of 19% of deals. For more in-depth analyses on angel investment groups and the companies being funded, check out the Halo Report!
October 11, 2014
Tech Coast Angels is Hosting the OC Entrepreneur Mixer
Looking for an event to get the entrepreneurial juices flowing and angel investor interest high? On October 8th, Tech Coast Angels is hosting the Orange County Entrepreneur Mixer where people of all walks can mingle, network, and maybe strike a deal or two. Members of the local startup community will have the chance to speak with many of our angel investors from Tech Coast Angels and gain some valuable insight about solidifying ideas, implementing those ideas, and even how to get funded.
The event will go from 5:30pm to 8:30pm and be held at the Real Office Centers (ROC) building at 4590 MacArthur Blvd. in Newport Beach on the 3rd floor. We are expecting a large turnout for this event, so please register ahead on our EventBrite page. We hope you all can make it out to this open forum for ideas and fun!
October 3, 2014
Tech Coast Angels Invests in Ascendant Spirits Inc. (ASI)
Ascendant Spirits Inc. (ASI) is a craft distillery — the first manufacturing spirits on the Central Coast of California. It makes approximately 95% of its revenues from the production and sale of distilled spirits, such as bourbon, moonshine, and vodka. ASI also does some contract production of grappa and brandy from grape products for winemakers who are permitted to sell these products directly.
With the help Tech Coast Angels ASI is on its way to becoming cash flow positive and to be growing sales revenues each quarter while achieving this goal.
The management team seems to consist of the perfect mix: Stephen Gertman (President) who has over two and half years of distilling experience, Paul Gertman (CFO) who has run four startups and has experience as vice-chair and chief scientist of Caremark Inc., and finally Kyle Spencer Herman (VP Sales) with an impressive fourteen years of beverage sales positions as well as being Nolet’s CA regional sales manager for Ketel One Vodka and Nolet’s Gin.
September 30, 2014
Tech Coast Angels Welcomes Eight Companies to pitch for investment next tuesday
Tech Coast Angels is thrilled to announce an exciting event coming this Tuesday, September 30th. Eight companies will be attending this Landmark Angels and Tech Coast Angels Venture Forum. This will be an “investor-only,” by invitation event, featuring a sit-down luncheon with keynote address Smiling at Success; Laughing at Failure from Dave Berkus (BERKONOMICS).
Among the companies seeking investment are disruptive companies in the areas of personalized marketing promotion, endo-mechanical medical instruments, and innovative self-service beer & wine systems. There will also be companies innovating advanced software for operating systems, online content monetization and management, and revolutionary ways to make health data more accessible to consumers.
Keep and eye out for this event and watch out for these disruptive technologies and innovations as Tech Coast Angels looks to grow the cream of the crop by making wise and progressive investments.
September 26, 2014
Congratulations to Aggregage on Their Tech Coast Angels Funding!
Aggregage is a company based in El Segundo, California that has recently been funded by our firm. Here at Tech Coast Angels, we keep our fingers on the pulse of the entrepreneurial community to maintain awareness of any new problems or challenges that may arise, and we look to fund companies who create innovative solutions. Aggregage understands the constant shifts in content marketing and has worked diligently to become an authority in the space of digital media content aggregation. With many businesses struggling to get their message across in the B2B space due to the seemingly unpredictable changes in the digital marketing space, Aggregage knows how to hold a business’s hand through the clutter and get their message to the target audience. For businesses whose primary goal is to get the attention of other businesses, i.e., B2B companies, the problem of figuring out where to put their dollars to receive the desired ROI has become increasingly difficult. This is where Aggregage comes in and makes things easy.
Having already worked with huge companies such as Adobe, it’s fair to say this company knows what it’s doing.
Keep an eye on the progress of Aggregage by checking out their website!
Tech Coast Angels Voted Among the Top Angel Groups
Are you all wondering who some of the best angel groups are in the United States? Well there is good news for all the entrepreneurs and investors on the West coast, because we were ranked high among over 370 angel groups evaluated. In a recent article published by CB Insights, Tech Coast Angels ranked #5 in the Top 20 Angel Groups by Investor Mosaic list, which is very good considering many of the East coast angels also made the list.
To determine rankings, angel groups were ranked through Investor Mosaic by “[taking] into account factors such as past performance, network strength (who they know), selection aptitude and brand among other factors, and quantifies them to score and quantitatively rank investors.” This data is good new for us, seeing as how we excel all the categories.
Tech Coast Angels is the biggest angel group in America, so it’s no surprise that our ranking is #1 in CB Insights’ Top Angel Groups by Network Centrality list. CB Insights report that “Tech Coast Angels, which claims to be the largest angel investment organization in the US, features over 300 members covering all of Southern California and led all angel groups in terms of network centrality – a measure of network strength.” Look out Bay Area, because Southern California is catching up!
While we share this state with the likes of Silicon Valley, we are also proud to contribute to the statistic that ranks California #1 in deal share. “California led all states in terms of deal share of the top 20 angel groups’ investments since 2011 at 33%, with 7 of the top 20 angel groups being based in CA,” say CB Insights. It would seem that there is still small nuggets to be found in the Golden State, particularly in the southern half. Looking to become part of the Tech Coast Angels family? Visit techcoastangels.com to see how you can add to our outstanding statistics of success!
September 24, 2014
Tech Coast Angels has the strongest network
The network of an investor is incredibly important both for raising additional capital, as well as strategic expertise in a given area. Tech Coast Angels, which claims to be the largest angel investment organization in the US, features over 300 members covering all of Southern California and led all angel groups in terms of network centrality – a measure of network strength. Palisades Ventures was the most prolific follow-on VC for Tech Coast Angels, as the LA-based VC shares multiple portfolio companies with Tech Coast Angels.
Heading north, Sand Hill Angels ranked second in network centrality among all angel groups. The 100+ member group, which ranked in the top 3 most active angel groups in the Q1 2014 Halo Report, most often sees follow-on investments from VCs such as New Venture Partners, DFJ Gotham Ventures, and ECentury Capital. Their recent investments include participation in restaurant tech company NoWait’s $10M Series B, as well as Storefront’s $7.3M Series A. The full rankings below.
August 14, 2014
Tech Coast Angels Invests in HitFix
- tttSuccessful Entertainment Site Closes New Round of Funding From Media Guru Gordon Crawford, Tech Coast Angels and Golden Seeds
tttLOS ANGELES--(BUSINESS WIRE)--July 02, 2013--
Tech Coast Angels (TCA), the nation's largest angel investor network, today announced that its Angel Capital Entrepreneurial Fund (ACE) committee has invested in a second round funding that helped raise $1.8M for HitFix, the top online destination for what's new in entertainment. Additional investors include, Golden Seeds, an investment firm dedicated to the empowerment of women entrepreneurs, and Gordon Crawford who committed a large personal investment in HitFix. Crawford is a retired influential investment fund manager best known for his 40-year career at Capital Group and dispensing wisdom to the titans of media, entertainment and technology.
“Since HitFix's inception, founders Jen Sargent and Greg Ellwood have built the top editorial team in the business, strategically using its angel investments to lead consumer discussion and deliver top-notch content to its growing fan base,” said ACE deal committee member Ray Chan. “Their continued success and high-rate of expansion to digital partners such as AOL, Hulu and YouTube makes us confident that our money is in good hands.”
HitFix is the fastest growing online entertainment news destination, reaching more than 4 million monthly unique users (with a higher concentration of the coveted 18-34 year old demographic than any of its competitors) and upwards of 50 million across its video distribution network.
“This latest round of funding continues to validate the work that our team does every day to bring the best entertainment content to our fans, ” said co-founder and CEO Sargent. “We're humbled by this sizeable investment from some of the biggest names in the finance space, which will allow us to expand our reach across all platforms.”
Since 1997, TCA has supported and funded more than 200 start-up companies. The ACE Fund gives both private and institutional investors the opportunity to access diversified, early-stage, game-changing entrepreneurial company investments that would otherwise be available only to experienced angel investors. For more information, visit https://www.techcoastangels.com/ace-fund.
ABOUT TECH COAST ANGELS
Tech Coast Angels is the largest angel investment organization in the U.S. founded in 1997. As a catalyst in helping build Southern California's economy into a thriving center of technology and entrepreneurship, the nearly 300 members of TCA collaborate with each other on due diligence and then make individual decisions regarding potential investments. Providing more than just money, TCA brings connections, knowledge, mentoring and operational assistance to bold early-stage entrepreneurs with game-changing ideas. Not limited to the technology industry, members invest in exciting companies in a wide range of industries including biotech, consumer products, Internet, IT, life sciences, media, software and environmental, among others. TCA is a not-for-profit organization. For more information, visit https://www.techcoastangels.com/.
Co-founded by Jennifer Sargent and Gregory Ellwood, HitFix is the top destination for 18-34 year old consumers to discover what's next in entertainment news and events. HitFix calls on the talents of renowned entertainment journalists such as Alan Sepinwall, Drew McWeeny, Daniel Fienberg, Kris Tapley and Melinda Newman to produce wide-ranging news, interviews and commentary on all aspects of entertainment. On a monthly basis, the site reaches over 4 million uniques directly and over 50 million users across their multi-platform video distribution. For more information visit www.HitFix.com, www.facebook.com/hitfix, www.twitter.com/hitfix or www.youtube.com/hitfix.
tttCONTACT: For Tech Coast Angels
Justine Mrsich, 714-573-0899 ext. 238
tttSOURCE: Tech Coast Angels Copyright Business Wire 2013
July 6, 2013
Tech Coast Angels Number Two In Angel Investments Report
The Tech Coast Angels, Southern California's largest angel investment group, is ranked number two in the nation this year in terms of the number of deals the group did, according to the latest 2012 Halo Report. The report, a national survey of angel group investment activity, was released today by The Angel Resource Institute (ARI), Silicon Valley Bank (SVB) and CB Insights.
According to the report, the Tech Coast Angels slipped from last year's number one position, due to the activity of the New York Angels. Overall, the report found that angel investing for the year was stable compared with prior years; the report said that pre-money valuations for early stage companies remained steady at $2.5M, median angel round size for Q4 2012 was $690K in Q4 2012 for the second quarter in a row.
April 16, 2013
Dave Berkus: Why I’m an angel investor
By JAN NORMAN COLUMNIST / ORANGE COUNTY REGISTER
April 8, 2013
Tech Coast Angels Los Angeles Network has a new home page
For more information please see https://www.techcoastangels.com/la
March 4, 2013
TCA San Diego in the News
LA Times – Tech Coast Angels Los Angeles launches program to fund start-ups in 30 days
By Andrea Chang
February 27, 2013, 9:05 a.m.
Good news for local entrepreneurs: Tech Coast Angels' Los Angeles branch has launched a program to fund start-ups in 30 days or less.
Michael Green, president of the L.A. branch of Tech Coast Angels, said the Screening2Deal in 30 Days program would speed up the process to get start-ups off the ground. The move is also designed to raise TCA's profile among entrepreneurs, who often seek out funding from more well-known investors or accelerators in the area, he said…… more at http://www.latimes.com/business/technology/la-fi-tn-tech-coast-angels-startups-20130226,0,6043088.story
February 28, 2013
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