Getting to Screening

The following post is from Antonette Ho, Group Operations Manager at Boston Harbor Angels.

At Boston Harbor Angels, we oftentimes get asked what is the best way to secure angel investment. For someone who has never raised money before, it can be a daunting task. Who do you approach? What do you ask for? How much time do you need to spend? In summary: where do you start?

As Ziad Moukheiber, CEO of Boston Harbor Angels, shared, the first thing you need to know is that there are six stages an entrepreneur goes through when seeking funding from angel investors:

• Screening
• Group Pitch
• Due Diligence
• Deal Negotiation
• Close
• Launch

The first step that entrepreneurs need to get to is screening. I recently had the pleasure of interviewing Marcos Bento, Deal Flow Manager at Boston Harbor Angels, who shared what it means to get to screening, tips for entrepreneurs looking for angel investors and the advantages of having an angel investor.

A little about you: what’s your story?
My name is Marcos Bento, I was born and raised in Brazil and I have a BA in business, a certificate in Project Management from University of California, Berkeley Extension and I’ll graduate from the MBA program at Babson College in May 2017.

I have five years of experience in corporate strategy working at a leading renewable energy company and I’m currently working at Boston Harbor Angels in the deal sourcing process.

What is your role at Boston Harbor Angels?
My role is to identify companies that will be leaders in their market segments and who are at a stage where our members can contribute to their success. Because Boston Harbor Angels is geography and industry agnostic, I have the opportunity to talk to brilliant entrepreneurs from various backgrounds: biotech, 3D printing, internet companies, food startups, just to name a few. We receive many deals from various sources.

What I like the most about the job is that it never gets any easier: there will always be industries to research, a new technology to understand and new team members to meet. Hence, my job is not to select the companies I like the most, but rather is to screen entrepreneurs that will benefit the most by being connected with the Boston Harbor Angels community: our investors, partners, sponsors and our networks. Our group is always happy to share resources and their connections with entrepreneurs they are working with.

What does “getting to screening” mean?
The Screening Meeting is the first step for entrepreneurs to meet and engage with the Boston Harbor Angels community. The group conducts monthly screening meetings at Nutter McClennen & Fish, our sponsor. The screening committee, consisting of 15 members, decides which companies to invite to the General Investor Meeting.

Getting to screening is not for every company though: every month Boston Harbor Angels reviews nearly 100 companies and only eight of them are invited to the meeting.

What are some things you look for when reviewing funding requests?
Since the group invests in early-stage companies, my first, and main, objective is to analyze whether the entrepreneur is a leader who Boston Harbor Angels would want to invest in.

There is also additional information I research and ask for:

• The size of the market: if the entrepreneur understands how it will evolve and how can the company take advantage of it.
• What unique competitive advantage has the startup built: this is traditionally translated by IP, manufacturing processes or even a new way to do business.
• The team, advisors and board members.
• Traction as a measure of number of clients, contracts and established partnerships. Here I want to understand everything related to the ability of the team to prove the business has a potential success story.
• Financial projections: the underlying assumptions behind it (bottom-up or top-down) and how reasonable it is.
• Exit strategy: what is the perception of the entrepreneur about how the investors exit.

Do you have any tips for entrepreneurs who are looking for funding, what to do and what not to do?
Do your homework before talking to investors. There’s plenty of available information on the Internet and on the angel investment community about the stage and the industries that investors are most likely to invest.

Find a great legal counselor to assist you. The cost (and implications) of making mistakes early on is much larger than what you’ll pay to have a good lawyer on your side.

Start networking today to get a warm introduction to any angel investor. Finding the right investor is as hard as it is to build a company. Our members are constantly attending events, serving as judges at competitions and networking with great people.