Friday, September 8, 2017

What does the timeline for a startup look like for @nwangelconf

On Sept 12th, we will review all the applying companies, stack rank them and then select the quarter finalists. We will also select a coffee ambassador for each company, so that there will be a coffee meeting with each quarter finalist. 

On Sept 19th and Sept 26th, we will hear 3 minute pitches (with slides) from the quarter finalists with a 3 minute Q+A for each company. And then we will select the Semi-Finalists

On October 3rd and October 10th, we will hear 10 minute pitches (with slides) from the semi-finalists with a 10 minute Q+A for each company. 

On October 17th, we will select the Finalists, constitute the due diligence teams and they will start researching each of the finalist companies, including site visits, company team reviews, customer reviews and financial reviews.  This will happen as possible between the due diligence teams and the companies. The investors will continue to meet each Tuesday until November 14th.

On November 14th, there will be a Mixer between all of the teams and all of the investors, so that any last minute details can be discussed and explored. 

On November 15th, the final event will take place. It is scheduled for 12:30 to 6:30. As a startup, please plan to be there early. If you are one of the finalists, the finalists will have a table space that they can put materials to talk to the audience about the company. 

All applying companies have already bought a ticket to the final event and will be able to bring members of their team. Please make sure to register all members who are coming, so we can plan on the event. We will send out complementary codes for all of the co-founders. 

You will want to keep your gust.com profile up to date and adjust it as you refine your thinking about your company, regardless of how far you get in this process.

In addition, all of the startups that have applied should get a debriefing meeting with one of the investors after they get out of the running. So every startup that applied should expect to have a sit-down with an investor. All of those should happen before the final event. 

Monday, July 31, 2017

Workshops for Seattle Angel Conference XII

Each cycle for the Seattle Angel Conference, we run a series of workshops. It helps to build a common vocabulary and to help both startups and investors to see if they are in the right space to start the process of engaging in Angel Investing.

We have started using Meetup.com as a way to organize and manage the workshops.

You can find our current set of workshops at http://meetup.com/Seattle-Angel

Over the next Month, we have workshops on:

You can get announcements for the workshops by joining the meetup group. As a member, you will get notices about a week before each of the workshops. 


Friday, May 19, 2017

Safkan Health wins SAC XI , Bridgecare Finance is Audience Favorite

Seattle Angel Conference XI Winner is Safkan Health
Safkan Health’s mission is  to deliver a safe, cleaner, simpler and more efficient technology for ear care. Safkan Health is led by CEO and founder Sahil Diwan.  The health-focused technology startup earned the winning $145,000 investment grand prize as the result of a group due diligence process over a 12-week period.
Audience Favorite Award:  BridgeCare Finance
The Audience Favorite award went to BridgeCare Finance, a Fintech company providing financing options for childcare and college, and founded by Audra Jung and Jamee Herbert.
About the Competition
The competition consists of a grueling diligence process lasting several months, with an elite group of six finalists being selected from a field of 43 total entrants.  The conference gave the finalists an opportunity to compete for the $145,000 grand prize before an audience of investors and tech leaders.  The May 17th competition was the result of a 12-week due diligence period
“The semiannual Seattle Angel Conference is a first step to engaging in the Angel Investing process. It connects new accredited investors with very early stage companies, “ said John Sechrest, Seattle Angel Conference founder. “The Seattle Angel Conference teaches new accredited investors about Angel Investing by doing a structured Angel Investment; from Vancouver,BC to Portland Oregon.  The finalist companies for SAC XI were a great diverse group of startups, and they all are making great progress.”
“Almost one out of nine people in Seattle are federally qualified to be accredited investors. Seattle Angel Conference is an on-ramp for people to learn how to support and amplify the local startup process,” Sechrest continued.  “The successful startups we fund today are the employers of tomorrow. We teach people how to invest locally into our northwest communities.”
Since 2012, the conference has trained over 275 first time angel investors, attracted over 800 companies and invested over $2 million dollars in 22 of the participating companies.  
FINALISTS: ROUNDUP
In addition to Safkan Health, the SAC XI finalists included:


Meta Arcade:  Interactive Narrative based games
StriveWear:  Muscle fitness monitoring for sports
Signl.fm: Podcast transcription
Bridgecare Finance:  Financial support for childcare and college

C3 Backflow:  Check valve monitoring and compliance tracking 

The next conference - Seattle Angel Conference XII will be held on the eastside in Redmond on November 15, 2017 - http://sac-xii.eventbrite.com

Sunday, April 30, 2017

MIT Enterprise Forum Northwest Meet the Angels Meeting – 4/19/2017


Seattle Angel Group leaders at MIT Forum - Meet the Angels 
By Ken Carlson


Once a year the MIT NW Forum holds an event which connects Angel Investors with entrepreneurs.  The objective is to provide the entrepreneurs with an insight as to how angel investors make their decisions to help with funding a startup.  The panel was moderated by Bryan Brewer, Founder of Funding Quest.  Bryan has been consulting with startups and helping them find funding since 1999.  The panel included Dan Rosen of the Alliance of Angels; Dante Jones of the Cannabis Investment Network; Eric Berman of Element 8; Juan Arango of the Keiretsu Forum; May McCarthy of the Puget Sound Venture Club; John Sechrest of the Seattle Angel Conference and the Seattle Angel Fund; Haresh Ved of the TiE Angels Group and finally, Ky Calder of WINGS investment group.

Bryan first asked each member of the panel to introduce themselves and tell a little bit about how their organizations help startups with funding.  Dante Jones of the Cannabis Investment Network was first.  The CIN is a membership based angel group for accredited investors that focuses on the cannabis industry.  They have a membership fee and their website is www.cannabisinvestmentnetwork.com.  They are looking for companies to invest in.  They will also have a Pitch Event Thursday, May 11th at the downtown offices of Lane Powell at 1420 Fifth Ave., 42nd Floor, Seattle, WA  98101.  Register at their website.  Dante said that the cannabis industry made $7 billion last year and their expectation is $50 billion going forward.  Washington state made $1 billion last year with $400 million going to taxes for the state.  Dante’s group connects entrepreneurs with angel investors.

Juan Arango, Entrepreneur Director for Keiretsu was next.  Keiretsu Forum is a global investment community of angel investors.  They have a worldwide network of capital, resources and deal flow with 49 chapters on 3 continents.  They are the most active venture investors in the U.S.  There are 400 accredited investors in the Northwest.  Keiretsu is looking for later stage startups with the ability to scale, a proprietary “secret sauce” and a solid team.

Dan Rosen represented the Alliance of Angels.  The group has been in operation for 20 years and has 120 accredited investors (their maximum).  They are northwest focused and the organization is not for profit.  They are the largest group in the northwest and they invest $10 million plus each year into 20 plus startups.  They also sponsor many events to help entrepreneurs in their quest for funding.

Ky Calder of WINGS was next.  WINGS is a group of investors that focuses on medical technologies in Washington State.  They invest $500,000 to $800,000 per year in 8 to 12 early stage companies.  They have invested more than $11 million in 23 companies since 2010.

Haresh Ved represents TiE Angel Group Seattle.  They specialize in pre-seed to seed companies primarily in Seattle and the NW region.  They usually invest in deals of $100,000 to $500,000, although they did a $1.5 million deal not long ago.  They focus on biotechnology, business products and clean technology.

Eric Berman is from Element 8.  They are an angel group previously known as Northwest Energy Angels and they are committed to supporting clean technologies.  They will look at early-stage companies all over North America.  They have done over $29 million since 2006 in 74 deals.  They have 70 investor members.  They look at clean tech and sustainability.

John Sechrest founded the Seattle Angel Conference and is involved in the Fund.  Their focus is educating potential angel investors and investing in their fund.  They look at startups in the Puget Sound and greater Seattle area.

May McCarthy represented Puget Sound Venture Club in Gary Ritners absence.  May is a member of Puget Sound Venture Club and an active investor and entrepreneur.  Puget Sound Venture Club started more than 31 years ago and has 30 members, all active investors.  Prospective entrepreneurs can sign up with PSVC and need pay only a small fee for the opportunity to present.  They have invested in over 880 companies some of which have been very successful.

Bryan asked the question of the panel, what are your pet peeves when it comes to entrepreneurs?  He said the most common challenge he had was that entrepreneurs are typically too close to their product and spend way too much time and too many words describing their product instead of showing the benefit to the investor.  It’s important to use less words, more pictures and stories to get your message across.

Dan Rosen said that he frequently would see the founder talk about many different things, but never say what they were actually doing (the problem they were addressing and how they solved it).  He also said that their last slide in their presentation should be why the investor should consider investing in their company.

May McCarthy said that the founder should state the problem then show their solution.  Don’t use too many words.  Instead use pictures that show how you solve the problem.

Eric Berman talked about the “hockey stick” and how it was really a fiction.  It’s more important to show the assumptions you have for your projections than spend a lot of time on the final number.  It’s a guess in any case.  But the assumptions can show the investor how the founder is thinking.  He also said that the founder needs to understand the difference between a product and a company.

Haresh asked “What do you do and why?”  He said that customer validation was very important.  If you don’t have customers, you don’t have a business.

John Sechrest said that it’s important to show what you know about your business, but it’s also very important to have the relationships that can help the business succeed.

Ky Calder said that it’s more difficult with medical devices.  Before anything happens, they have to work.

Juan Arango said that one of the typical problems was a valuation that was too high and not well thought out.  The valuation is what the company is worth at that point in time and is like an agreement between a buyer and a seller.  The founder is usually so proud of his company that they find it difficult to accept a valuation that is lower.    Juan also said, if you’re an investor and don’t know the founder or the team well, you shouldn’t invest.  That also applies to the founder.  If the investor isn’t a good fit for the founder, the founder shouldn’t take the money.

Dante said that the founder needs to communicate why the money is needed.  What will the use of funds be.  Marketing?  Sales?  Personnel?  The relationship between the investor and the founder is critical and includes the entire team.

Bryan next asked the panel “What sectors are most exciting to you”?

Dante said Cannabis Finance.  One of the biggest challenges facing the cannabis industry is financial.  Where can they put their money?  How can they get loans?  How can they operate without being a risky, cash based industry?

Juan said he likes companies that have high revenue and a reasonable valuation.  The specific sectors included IoT (Internet of Things), AI (Artificial Intelligence) and Security.

Dan likes VR (Virtual Reality) and AR (Augmented Reality), but first a great management team.  He is looking for multi-billion opportunities.  To find those, a founder needs to identify a problem that is important, but doesn’t have a solution, currently.  Those are the things Unicorns are made of.

Ky echoed that by saying that a simple solution to a real problem is what he is looking for.

Haresh liked building on platforms to arrive at a solution.

Eric focuses not only on their sector, but efficiencies that can be achieved in their sector using AI or IoT.  He is also looking for solutions for marketing and efficient learning.

John has no sector bias, but said that it is much easier to do due diligence on things that you know, rather than things you don’t know.

May has no bias, but is looking for good opportunities with the prospect for great returns.  She doesn’t like a company saying we’re just like them, i.e. we’re the Uber of shipping, or something like that.  She also likes medical technologies.

The next question posed by Bryan had to do with priced rounds versus convertible debt.  Convertible debt is less expensive for the entrepreneur.  Valuation is typically capped and there is usually an interest rate (i.e. 8%) plus a discount to the valuation (usually 20%).

May prefers a priced round (equity).  John said it’s easier to do convertible debt, but a priced round is better for the investor, if you can come up with a reasonable valuation.  Eric mentioned he was seeing a lot of convertible debt.  Haresh said it was important to not have a complicated document, whichever way you go.  Dan said that the history of the convertible note goes back about 20 years, but he suggested never signing a boiler plate note.  He prefers a price round.  Juan said that every investor negotiates individually.  Dante said his industry was different.  There are two types of companies – licensed or not licensed.  If you are investing in a licensed business, make sure you do equity, not debt.  He also suggested considering debt financing with a revenue share.  He said that Lighter Capital does this.

There was a question from the audience regarding Section 1244 of the tax code.  Section 1244 of the Internal Revenue Code is the small business stock provision enacted to allow shareholders of domestic small business corporations to deduct a loss on the disposal of such stock as an ordinary loss rather than as a capital loss, which is limited to only $3,000 annually.  It is designed to encourage new startups.  Dan Rosen is an expert in the area and was involved in protecting this provision.  He said that in the last 20 years, 100% of net job growth has come from startups.  This provision helps foster that growth.

When you take money from investors you need to communicate with them constantly, both good and bad news.  Never overpromise and underdeliver.  Especially don’t communicate with your investors just when you need money.  Keep them informed on an ongoing basis.  Juan suggested a clause in the agreement that shows required communication.  It should show the cash position, monthly burn, main projects, what the investor is needed for (traction, connections, other help) and what is the state of funding.

The final question from the audience was “where is it best to get funded?  Here or Silicon Valley?  May said it’s a matter of who you know and where they are.  Eric said you need to find the investor who best fits your needs.  Dan said that if you take money from Silicon Valley, they may expect you to move your business down there.  He also said that one of the first questions an investor from Silicon Valley will ask you is “Who have you contacted in the Northwest for funding?”  The angel community is small.  Investors talk with one another.  Before you go to Silicon Valley, at least try to connect with investors in the Northwest.  If that doesn’t work, you will be able to answer that telling question – did you try to get funding in the Northwest?

Great information from an excellent and representative panel of angel investors. Thank you to the MIT Enterprise Forum Northwest for putting the program together.


Ken Carlson



Wednesday, April 26, 2017

Building Better Ways to Live and Work Together



The burgeoning of entrepreneurship around the globe is just one exciting result of the disruptive arrival of the world wide web. The story is about much more than just a few unicorn success. The very term 'success' is becoming more nuanced, as founders define varying goals for their startups. As you launch and grow your company, getting a handle on the opportunities and challenges that await you will equip you for what is likely to be a much longer journey than you originally imagine. The people you work with, the choices you make along the way with forge the size, scope, and success of your company... and they will define you as a founder, a leader, and person. 

Join me for a deep dive into the world of entrepreneurship. The road ahead may be dark and rocky, but there are people ready to give you lights and maps along the way. And I promise you, a visit to the land at the far side of this trip is well worth your effort!

Gillian Muessig is the CEO of Outlines Venture Group, cofounder of both Moz (the world’s most popular search marketing software) and brettapproved (the fastest growing booking site for travelers with disabilities and mobility challenges). She is a cofounder of TiE WEN (TiE Women's Entrepreneurial Network) and a former tech advisor to the Bill & Melinda Gates Foundation. 

A frequent mentor and judge at startup events, Gillian has helped over 250 companies around the world to launch, grow, pivot and thrive. Her radio podcast, CEOcoach is heard every Monday by thousands of entrepreneurs around the world for more than nine years. Gillian consults privately with investors and founders and speaks worldwide on emerging markets and the impact of global trends on valuations and startup activity.

Monday, April 24, 2017

SAC XI Finalists Selected

The eleventh Seattle Angel Conference is coming up on the final event on May 17th.
After reading through dozens of company gust.com profiles, Seeing 3 minute Quarter finalist pitches, 10 minute Semi-finalist pitches , the investor participants have selected the Finalists for SAC XI.
We have 6 finalists from a wide range of industry segments.

The investors have now divided up into due diligence teams are are exploring the fundamentals of each of the companies.

On May 17th we will hear a final round of pitches and then the Investors will select a winning company for investment.  This final event is open to the public, so that we can help people see how Angel Investing works as a process. It gives insight into the issues that are of concern to the investors and some experience seeing the types of companies that were able to be selected out for the finals.


Seattle Angel Conference XI Finalists:
MetaArcade: a developer dedicated to empowering communities of creators through accessible self-publishing platforms

SafKan Ear Care: industry’s first automated and wearable cerumen removal device for clinical ear care

Cross Connection Control: cloud-based solution to more effectively manage water back-flow testing

Signl.fm: launched the first transcript-enabled Podcast platform

Strive Tech Inc:  connecting coaches, sports players and data through integrated on and off-field performance and wellness monitoring

BridgeCare Finance: delivering educational financing for quality childcare in support of growing families.

The selected finalists are undergoing due diligence process as they compete for the $145,000 investment grand investment.  Winners will be selected and announced at the May 17th event.


Thursday, February 9, 2017

What about Angel Conference Returns?


(or What kind of returns can I get from Angel Investing? )


When we talk to people about the Seattle Angel Conference, there is often a question about the previous returns that we are seeing from our efforts with our previous Angel Conferences.  This is actually a hard question to answer in a couple of ways.

The main hard part of the question, is that it makes assumptions about Angel investment that are not particularly helpful early on. There are features of Angel Investing that make it different than your regular old stock market investing that people who ask this question are trying to compare against.


Angel Investing:
  1. Takes a long time to see results
  2. Is not liquid, so you can't get in and out of it easily
  3. Has a weird return profile
  4. Depends a great deal on factors that are hard to measure
  5. Depends on factors that are hard to control


Rob Wiltbank and Wade Brooks at Willamette University have been studying Angel Investing and have collection some of the best data available. If you look at their data,
you can get a more comprehensive set of data about general angel investing.


Out of that we learn that exits tend to take some time. Sometimes a long time.
The typical expectation is that the Angel Investments make it to exit in 7-9 years. If you factor in that the ones that fail, tend to fail early, then the ones that win will tend to be later... even later than 7-9 years.


So given that the Seattle Angel Conference is 5 years old. We would expect a few failures and no wins.... And that is where we are at….


We have a list of companies and regularly track their progress. Over the last 10 cycles (5 years)
We have about 21 investments, depending where you draw the circle. We have depolyed about $2M.  And we have educated more than 200 Angel Investors.

Out of those efforts, we see:
No positive exits.
2 deaths.
9 have follow on funding of some kind.


In general, we can conclude about Angel investing that:


Angel Investing is risky.
The investment is illiquid.
It will take a decade to win, if it wins.
Out of every 10, you will see 9 not give enough money back.
You need to be in 20 deals to have a good chance of winning.
This assumes you do good due diligence, remove the bad ones
and only start with very very very good companies at the beginning.


However, more importantly, the Seattle Angel Conference is not about returns. It is about learning. While it can be risky if done wrong, Angel Investing overall seems to produce some interesting returns , as we see in the Wiltbank data. What are the habits and behaviors that make it more likely that you will achieve those types of returns?


We believe that Angel Investing process can produce good returns if you engage it well. You can explore the Halo Report from the Angel Resource Institute and see that overall Angel annualized returns look like 25% / year. But these returns are not evenly distributed at all.  More than 60% of the companies loose some or all of the money invested. Close to 30% provide some returns, but not a lot. So this is not a normally distributed return profile.


More importantly for the Angel Conference model, the process is a bit overly structured to make it possible to create more learning about the process of investing. So those companies that are exceptional, have previous experience, know the network of investors and have great momentum…. They are already connected to people and are quick to get funding. So the angel conference never will be about optimizing the returns. Instead, it is a very low cost, simple way to get a deep look into the process and to learn about the issues that make Angel Investing interesting. And to see first hand some of the issues that are hard to deal with and deserve significant consideration before proceeding on a deal.


For New investors, who have never  been inside an Angel Investment, it is a great way to gain perspective about the market, the structure of companies, and to build relationships in the market. It is the expectation that alumni investors of the Seattle Angel Conference will learn a great deal about their investment thesis and where they want to engage. And then will move on to the other Angel groups that match their goals.  


If an early focus on returns is the highest priority for the investor, then it is likely that the risk profile is one of low risk and this may not be appropriate to engage in the process of Angel Investing.


To repeat a bit:


Angel investing is risky - Learn where things work and where they don’t


If you have a low risk profile it will be frustrating.


Returns take a long time.


The return distribution is not normal. It is specifically highly skewed.


The conference is not built to provide excellent returns, it's built for education. If you learn (hence the conference) and build a portfolio, returns can be pretty good.


There are other Angel Organizations in Seattle that have a much stronger focus on building an opportunity for good returns:


Seattle Angel Fund - http://seattleangelfund.net
Alliance of Angels - https://www.allianceofangels.com/



There is some data about how they are performing here: (2015)

Every April, the MIT Forum has been doing a “Meet the Angels” workshop, where folks talk about how Angel Investing works




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Angel Resource Institute - Halo Report - https://www.angelresourceinstitute.org/