What a year it has been! Officially launching our fund in January 2014 and signing on over 50 women investors by June of last year were major accomplishments in themselves. We proved that there ARE women with the means and interest to be angel investors both in the Southeast and beyond. We also found many other partners and supporters who believe that more women should play an active role in our entrepreneurial ecosytem, both as investors and entrepreneurs. Our mission to make the Southeast the BEST place for a woman to invest in or grow a business resonated far beyond our back yard, gaining us recognition as “Angel Group of the Year” from BuildUP, a Silcon Valley organization dedicated to increasing diversity in the tech start-up sector.
By July, 2014 we had made our first investment, in a company we were introduced to through connections with the Angel Capital Association (ACA). SuperfanU, co-founded by Kayla Mount and Chris Nowak, hired Tendai Chariska as their CEO soon after one of our partners, Betsy Brown and I met him at the ACA conference in D.C. last April. The power of the networks within groups such as ACA has proven tremendous as we began to build our deal flow and learn about potential investment opportunities around the SE. It has also lent itself to forging strong relationships with other funders as we begin to look at syndicating and sharing deal flow. To be a strong angel investor, you must continually build and develop a strong network of other angels, potential mentors, and connectors that will benefit the companies your work with in the future. This has certainly been true with our relationship with SuperfanU, as well as several other deals we have partnered on.
Also this summer, we began using Proseeder as our deal platform. We were introduced to Proseeder through Golden Seeds, who was one of their first clients, and then later at ACA, where they offered a year long trial for all ACA members. This was a critical step for our nascent fund as our deal flow was picking up considerably and having a robust management tool has been crucial for our success. Through the platform we are able to communicate with our investors, share deal information, and syndicate deals with other angel groups. It also helped us streamline our application and screening process, as our deal flow had become almost unmanageable — a great problem to have!
Speaking of deal flow — we have been overwhelmed with the sheer number of companies that have come to us, either through our web portal, by referral, or through our angel group networks. One of the challenges some early advisors said we might face was that the deal flow would be minimal, given our “narrow” focus on women-led companies within the Southeast. This has been proven wholly untrue. While a handful of the companies who apply are not yet ready for an equity investment or may steer closer to a “lifestyle” business, the majority have been strong candidates — growth oriented companies with strong products and teams. The challenge has been how to determine which ones will make the best investment for our fund (a challenge any angel investor faces).
From a pool of over 65 companies who applied since last spring, we have developed a robust portfolio of seven companies, ranging from very early stage investments, to later Series A-2 and B rounds. The variety of stages our companies are in, along with the diversity of industry sectors (consumer goods, healthcare, and technology) have been strategic as we seek to find the best opportunities for ROI. The common qualities that stand out with each of the companies in which we have made an investment include:
Rock Star Founders/Teams — each of our investments have hinged on the confidence we have in the entrepreneurs running the show. Do they know their company/product/market inside and out? Do they have experience that lends itself to the success of the company? Can they pitch their product well to investors and customers alike? Do they have business acumen on their team to pull off the day-to-day operations? Are they comfortable with the financials of their business and can they walk you through their projections with real knowledge?
Due Diligence Divas — we have crafted our diligence process and checklist from some of the best (Golden Seeds and ACA have offered terrific guidance). An entrepreneur needs to have her company documents, including IP, financials, market comparisons, exit strategies, etc. readily at her fingertips. Those who have been able to not only provide immediate access to the documentation and follow-ups we request, but have been able to answer our “deep dive” questions with in-depth knowledge of their company and industry have been the clear stand-outs.
Eye on the Prize — the final question in most pitches is “what’s your exit strategy?” As investors, we are first and foremost looking for a strong return on our investment and expect that any founder/CEO would have carefully and diligently worked through their best prospects for future acquisition and/or strategic partnerships. It is a fine balance to walk from running and building your company to positioning it for a successful exit (you won’t get to the latter if you don’t do the former) but we want to see your thinking on this and know that you understand what markers you will need to meet to get there. Those who target “Google” or “Facebook” as potential acquirers are usually not grounded enough in reality to understand the true path to a successful exit.
We have had an amazing first year and are excited for the prospects that lay ahead, both for growing our portfolio companies and adding new ones to the mix. If 2015 is anything like the year in review, I am looking forward to yet another terrific ride. — Kristina