So I work for a small healthcare tech startup. And when I say startup I mean our annual revenue last year barely covered the cost of a Christmas party for 8 and no spouses. Right now we're at the stage where funding is from friends, family, and fools. The boss is looking to raise more capitol in the next 6 months or so and the low tier equity guys tend to want 5mil plus in revenue. My BIL is an equity guy with experience in taking small cap (under 250m) companies public or arranging their sales so he's not really not too keen on providing advice for startups. As I see if if we want to pull in more investors (ours currently have net worths ranging from a few million to over a billion) we need to consider the Angel Investor equity pool. So, who amongst the vast range of beebers has done Angel investing or obtained funding from Angel investors? What do you look for or how did you find it and close the deal? I'm not a part of the funding decisions but am curious how that equity pool works in general.
At Motion and Bird, we do giveaway our money. That's for sure. Good luck with the company...that could be a very profitable adventure if it pans out
I used to talk with a dude who was into similar style of investment that could be considered angel investment. But he took a huge chunk and maybe your soul on exit. he was rich and not looking to lose so much as a nickel. I worked with him on a couple of projects, be very careful. Sharks don’t just swim, some drive Ferraris.
If you already have investors and they don't want to put in any more money, are you really gonna spark interest elsewhere? Angel investors typically want to double their money within five years, and maybe some equity to boot. Might as well have the CEO put it on a credit card as he would get better terms.
check out ventureloop.com - it’s probably more known as a hiring platform for small healthcare/pharma startups, but I think they also have a list of their VC partners somewhere. Outside of getting lucky with investment opportunity here, those VCs would probably be good start for the type of investment you’re looking for. I’m in pharma, I do process chemistry, btw - what flavor of tech healthcare startup is your thing?
I do a great deal of work helping PE groups get their investments back on track when essentially it's gone off the rails from a management/staff standpoint. Oh I'm gonna use this one. Best one of the year was the BOD meeting last week (in reference to a failing customers forecast) "I trust their numbers about as much as I trust gas station sushi."
This was my first question as well - it will definitely be one the CEO needs to answer. "It sounds like your current investors have sufficient capital to fund further investment into your company.. why are you reaching out to me?" Not necessarily a bad/negative question but your guy definitely needs to give a good answer.
Saw a joke skit… this kid tells the umps at a softball game that he’s a good guy… gives half his money to charity every Friday after work… unless she’s off then he gives it to angel
It's not so much of an issue if the seed round funding comes from Aunt Bertha and other less sophisticated investors. If it was Andreessen or others throwing up their hands and saying "no mas", then yeah, you've got some 'splaining to do. You'll definitely want to spell it as "capital" when asking for money from these guys. What valuation did the seed round take place at and what valuation are you thinking currently for the angel round? My strong suspicion is there's going to be a fair amount of dilution happening to existing investors unless there's language prohibiting that (their rarely is, but if your CEO is sharp and the initial investors aren't that sophisticated than there's the chance that there's no anti-dilution clauses). I invested some of my old boss' money in seed and angel rounds back when we had a good relationship so have been on the investing side but have not been on the other side of the table. From being loosely in that ecosystem, the way to get money is to network, network, and network.
Thanks for all the info guys. I'm really more or less curious about how expanding past friends family and fools works. Good points about being concerned about the initial investors hesitating to throw in more. I'm not privy to those conversations so I don't know one way or the other. The first startup I was with had one guy committed to funding as long as needed and just sitting on the board with minimal input. This company runs lean and the plan is to retain as much ownership as possible amongst the core founders and employees and only solicit funding as needed. That said I think a boost of cash to add development capacity would be beneficial and help mature the product more quickly. But hey, I'm the agile guy trying to keep sales, product, and development moving in the same direction and not killing each other. I ain't involved in no Capitol or capital decisioning or strategery day to day. I do love to pick up as much knowledge as I can and relay what's useful to the right peeps.
