Angel Investor's Toolkit

Angel Deals – October 2010

Kent Pavey — Thu, 28 Oct 2010 23:13:06 +0000

Each month we present a list of deals that have come to our attention for including participation by angel investors. Whenever possible the deal summaries below include a link to an article or website that provides additional information about the deal. Please leave comments describing additional angel deals and we will include them (with credit) in our list. Enjoy!

Mountain View, California based ShopSocially, an online shopping recommendation site, has received $1.1 million in Series A financing. Valhalla Partners led the round. Angel investors including Raman Khanna, Ashish Gupta and Dharmesh Thakker participated in the round.

BioSystem Development, a life science analytics company based in Madison, Wisconsin, has closed a $978,000 round. The funding will allow BioSystem to expand its manufacturing infrastructure and launch new products. The financing included existing investors as well as new angel investors from California, Illinois, New York, North Carolina and Wisconsin.

RocketRoute.com, a UK-based aviation flight planning solution provider, has raised £220,000 from the Thames Valley Investment Network. The TVIN is an angel investment network based in Reading and the Thames Valley. RocketRoute.com will be using the money to take its online flight-planning service to market.

San Bruno, California based SocialShield has secured a $10 million Series A financing round. SocialShield provides an online service that allows parents to monitor their kids’ use of social networks including Facebook, MySpace and Twitter. The Series A was led by Venrock, U.S. Venture Partners and unspecified Silicon Valley Angel investors.

Need Angel Investing Software Tools? Want better results? Get the Mac version, or the Windows version, of the Angel Investor Toolkit now for just $795. That’s about the cost of a single technical conference or marketing report. If you are not entirely satisfied, I’ll refund your money at any time.

Angel Deals – September 2010

Kent Pavey — Fri, 08 Oct 2010 01:47:22 +0000

Lantos Technologies Inc. closed a $1.6 million Series A financing. Catalyst Health Ventures led the round. Excel Venture Management and Mass Medical Angels also participated. Lantos Technologies is developing an intra-aural three-dimensional scanner for applications in audio equipment such as hearing aids, earphones and noise-canceling devices.

Expensify, the San Francisco developer of expense reporting applications, has closed a $5.75 million Series A led by Redpoint Ventures and joined by its seed round investors, Hillsven Capital, Baseline Capital and angel Travis Kalanick.

Marlboro, Mass.-based Copiun Inc., a provider of corporate endpoint data management solutions, has secured $1.9 million in Series A funding. The round was led by Hub Angels and RRE Ventures. They were joined by Beacon Angels, Launch Capital and Launchpad Venture Group.

Virtualization giant VMware announced Tuesday that it has acquired an IT analytics startup called Integrien for $100 million. Irvine, Calif.-based Integrien offers systems monitoring software, similar to IBM’s Tivoli, with an emphasis on up-to-the-minute information about infrastructure problems. Itegrien was funded by Clearstone Venture Partners, Tech Coast Angels, Acartha Group, and Mariner Capital Ventures, most recently in an $8 million round announced in May.

Why Angel Investors Need to Do Better

Kent Pavey — Mon, 20 Sep 2010 00:13:35 +0000

America needs Angel Investors to improve their batting average. Although exact numbers are difficult to come by, here are some ballpark figures that illustrate my point:

There are over 250,000 Angel Investors in the U.S.

These angels invest over $25B per year (note that this is in the same neighborhood as the total Venture Capital investment dollars which tops $30B per year)

This angel capital supports about 50,000 start-up investments each year (this is an order of magnitude larger than the number of VC start-up investments, which is less than 5,000)

These numbers show clearly that Angel capital is a primary rocket fuel for innovation and the U.S. economy.

Now the bad news – conventional wisdom says that only 1 in 10 angel investments will produce a significant return. The rest will either fail completely or result in a modest return. Look again at the above numbers. While mathematicians will correctly note that you need to examine the details to make precise statements, one straightforward interpretation would lead us to the following conclusion:

Over $20B of the $25B goes to support 40,000+ start-ups that fail to really make a difference!

Imagine the impact if Angels could improve their success rate to 2 or 3 out of 10. It would be like firing a second stage booster rocket, lifting the U.S. economy and propelling us into the future. Angel investors need to realize how valuable their capital is and to be more selective in their investment decisions.

Angel Deals – August 2010

Kent Pavey — Mon, 06 Sep 2010 21:46:13 +0000

TransFS, a Chicago-based comparison shopping site for credit card processors, has raised $510,000 in seed funding from Hyde Park Angels and 500Startups.

CRE Secure, a payment solution for online merchants, based in Atlanta, has raised $3.18 million in funding from Total Technology Ventures, Miller Capital Partners and individual angels.

Basho Technologies, a Cambridge, Mass.-based provider of distributed data store solutions, has raised $2 million in Series C funding from undisclosed angel investors.

Need Angel Investing Software Tools? Get the Mac version, or the Windows version, of the Angel Investor Toolkit now for just $795. That’s about the cost of a single technical conference or marketing report. If you are not entirely satisfied, I’ll refund your money at any time.

Ten Important Reminders Before You Write That Check! – Number 8

Kent Pavey — Wed, 11 Aug 2010 18:29:47 +0000

Reminder 8: There will always be another deal! —

Its easy to get caught up in the excitement of a new deal – “What a great product idea!!”, “This CEO is a rock star!!”, “This deal is going down really fast!!”, “I gotta do this deal NOW, before anyone else finds it!!”, “They are closing this Friday!!”, etc. etc. blah, blah, blah.

The reality is that there are a lot more exciting start-ups out there than you can possibly fund & if you have money to invest, deals will continue to find you. Both good deals and bad deals will find you, and it is often (usually) difficult to tell which is which. In nearly all cases, opportunities sound much more exciting before your investment than they do six months after your cash is committed.

So don’t let your enthusiasm cloud your judgment. Don’t allow yourself to be rushed into investing until you’ve completed your investment process. All deals sound great in the sales pitch, yet most start-ups fail. A quick decision can easily cost you $50K, so its better to let them go than to jump in without a true understanding of the opportunity.

There will always be another deal.

Angel Deals – July 2010

Kent Pavey — Mon, 26 Jul 2010 20:54:40 +0000

HitFix, a Los Angeles based entertainment journalism online resource, has raised $1.6 million in second-round funding led by Tech Coast Angels.

Tapulous, developer of iPhone social gaming apps, has been acquired by Walt Disney. Bart Decrem, Tapulous’s founder, is joining Disney along with COO Andrew Lacy. Tapulous has received $1.8 million from angel investors including Marc Benioff, Andy Bechtolsheim and Jeff Clavier.

GroupSpaces, a London based provider of tools for groups and communities to manage their online presence, has secured a $1.3 million investment from Index Ventures and several angel investors including Simon Levene, Meagan Marks, Dave McClure, Ariel Poler, Chris Sacca, and Quincy Smith of CODE Advisors. Index Ventures partner, Mike Volpi, will join the GroupSpaces board.

Maven Research, a San Francisco-based micro-consulting platform that lets individuals market their expertise, has raised $1 million in seed funding from Accel Partners and individual angels including Edward Zander, the former chief of Motorola and William Krepick, the former chief executive of Macrovision.

Beyond the Rack, a private shopping club for those who want designer brand apparel and accessories at “flash sale” prices, has raised $12 million in new VC funding from Highland Capital Partners and BDC Venture Capital. The company was previously backed by angel investors. Beyond the Rack is based in Montreal.

ShopKick, a Palo Alto, Calif.-based company that combines mobile apps with physical retail shopping, has raised $15 million in Series B funding. Greylock Partners led the round, and was joined by Kleiner Perkins Caufield & Byers, Citi Growth Ventures & Innovation Group and SV Angels.

Language Weaver, a Marina Del Rey, California based provider of automated language translation software, has been acquired by SDL for $42.5 million in cash. Language Weaver had raised over $4 million in VC funding from In-Q-Tel, Palisades Ventures and Tech Coast Angels.

EndoStim Inc., a St Louis-based developer of novel programmable implanted electro-medical devices to treat various gastrointestinal neuro-muscular disorders, has raised $6 million in Series B funding. Santé Ventures led the round, and was joined by Prolog Ventures, Vectis Healthcare & Life Sciences Fund and individual angels.

SeatGeek Inc., a New York-based secondary ticket market for sports and concert tickets, has raised $1 million in Series A funding. Founder Collective led the round, and was joined by NYC Seed. The company previously raised $500,000 from Stage One Capital, Trisiras Group, PKS Capital; and angel investors Arie Abecassis, Sunil Hirani, Thomas Lehrman, Allen Levinson and Mark Wachen.

Great Lakes Pharmaceuticals, a Cleveland developer of products designed to prevent infections associated with indwelling catheters, has raised $3.1 million in Series B funding. Charter Life Sciences led the round, joined by Early Stage Partners and return backers Everett Partners, Ohio TechAngel Fund and North Coast Angel Fund.

ConnectYard, a developer of a centralized social media communications platform for education institutions based in Wayne, N.J, has raised $500,000 in Series A funding from the Jumpstart NJ Angel Network.

Is That Bridge Loan Really A Pier?

Kent Pavey — Sat, 24 Jul 2010 23:43:18 +0000

Convertible Bridge Loans are common financing instruments for startup companies. These loans typically pay a favorable interest rate and contain a “sweetner” (either warrants or a discount on the price of the next financing) to compensate investors for taking the extra risk. Angel investors should carefully consider two primary issues before participating in bridge financing:

First, be sure you are convinced that you are investing in a bridge and not a “pier”. A bridge has two ends and you should only invest in a bridge loan if you are convinced that it will lead to a successful future financing round. Will the progress made from the bridge loan be sufficient to convince other investors to participate in the next round? Are serious investors already showing interest in participation?

Secondly, investors in bridge loans take a lot of risk for a modest reward. The discount or warrant coverage rarely provide the kind of upside that you would get from establishing a current valuation and forcing a preferred round instead.

The Angel Investor’s Toolkit can help you quantify the risks and the potential returns from convertible bridge notes with either discounts or warrants. It also supports “what-if” modeling for any number of bridge loans or preferred stock private equity financing rounds.

Angel Deals – June 2010

Kent Pavey — Fri, 25 Jun 2010 16:34:34 +0000

Snaptic, a San Francisco-based provider of note-taking and note-sharing apps for mobile devices, has raised $2.3 million in seed funding from Excel Venture Management and individual angels. Excel’s managing director Juan Enriquez will also join Snaptic’s board of directors.

Scality , a provider of object storage software for email and cloud storage applications, based in France, has raised a first round of $5 million. The round was led by Credit Agricole Private Equity and Galileo Partners, and included individual angels and company management.

Sugar Inc., a San Francisco-based blog publisher, has acquired FreshGuide Inc., operator of an online coupon site focused on urban women. Sugar has raised over $30 million in venture funding. FreshGuide recently received seed funding from Baseline Ventures, NBC Universal, Hatch Ventures and Ron Conway’s SV Angel fund.

TeamSnap, provider of an online service to manage sports teams and other groups (based in Boulder, Colorado), has raised $700,000 in first-round funding from eonBusiness and individual angels.

Pharnext SAS, a French biopharmaceutical company specializing in the development of innovative treatments for severe neurological diseases, has raised €4.8 million in Series A funding at a €45 million post-money valuation. Backers include Truffle Capital, Aurinvest Capital, Financière Boscary and individual angels.

Alibaba.com has agreed to acquire Vendio Services, a San Mateo, Calif.-based provider of ecommerce services. Since its launch Vendio has raised around $40 million in VC funding, with investorscincluding Sequoia Capital, Technology Crossover Ventures, CMGI @Ventures, MVC Capital, Lighthouse Capital Partners, Angel Investors, Argus Capital Group and Stanford University.

Aeristech Ltd., provider of turbocharger technology for enhancing fuel efficiency in vehicle engines (based in Birmingham, UK), has raised £500,000 in seed funding. Midven led the round, joined by the Minerva Business Angels Network and members of the Oxford Investment Opportunity Network.

Molecular Detection Inc., developer of molecular diagnostic tests to increase the speed, accuracy, ease of use, and efficiency of infectious disease diagnosis (based in Wayne, Pennsylvania), has raised $1.4 million in funding, led by MentorTech Ventures. Other investors included Robin Hood Ventures, Elm Spring Holdings and the Mid-Atlantic Angel Group.

Financing Risk = The Angel’s Achilles Heel

Kent Pavey — Thu, 10 Jun 2010 01:00:31 +0000

Conventional wisdom says that private equity investors should place primary importance on the management team. For angel investors, future financing risk is also a critical consideration. Here’s why:

Angel Investors typically invest after friends and family, but before “institutional money” (VCs and the like). This is inherently dangerous because of the risk of falling into the funding chasm (see my post on the funding chasm).

Even if the team, market and product all look exciting, a savvy angel investor should separately evaluate the probability that the company can raise their next round of capital. To do this analysis, here is a good set of questions to ask:

How much total capital is the company likely to need before they become cash-flow positive?
Do you have the deep pockets to provide all this capital? (if so then you are well-heeled, Achilles )
Is the company raising enough money this round to accomplish significant results before they must raise more capital? (significant results = will be able to attract additional NEW investors)
If successful with this round of financing, will the company represent an exciting opportunity for institutional investors / VCs?
Is this a VC fundable company and can you identify 3 VCs who would be interested?

If you’ve thought about these questions and have good answers, you will sleep better after you’ve written your check!

Angel Deals – May 2010

Kent Pavey — Thu, 27 May 2010 18:31:57 +0000

Alphabet Energy, a developer of breakthrough waste heat recovery technology based in Berkeley, California, has raised $1 million in seed funding from Claremont Creek Ventures and the CalCEF Clean Energy Angel Fund

Newsy, a Columbia, Mo. based online video news service that monitors, analyzes and presents the world’s news coverage, has raised $2 million in second-round funding from individual angels.

Swipely, an online service platform company based in a Providence, R.I. that “turns purchases into conversations”, has raised $7.5 million in Series A funding led by Index Ventures. Index was joined by Greylock Partners, First Round Capital and individual angels including Silicon Valley veteran Ron Conway and former Google executive Chris Sacca.

Localytics, a Cambridge, Mass.based provider of a mobile analytics platform, has raised $700,000 in first-round funding from Launchpad Venture Group and New York Angels. Localytics is a graduate of TechStars Boston’s 2009 class, and was chosen to be an inaugural resident at Polaris Ventures Partners’ Dogpatch Labs in Cambridge.

SeniorHomes.com, a Seattle Wa. based online directory for seniors and their families searching for senior care or senior housing, has raised $1.1 million in Series A funding. MentorTech Ventures led the round, and was joined by Amicus Capital and individual Seattle and Silicon Valley angel investors.

Bioformix (no website), a developer of “a broad new class of green, sustainable, environmentally benign, biologically benign monomers, resins and polymers” for sustainable adhesives and plastic alternatives, has raised $1.05 million in VC funding from CincyTech and Queen City Angels. Bioformix is based in Blue Ash, Ohio.