For Entrepreneurs

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Rockstars wanted!

Funding Process

Before submitting your business plan for our consideration, you must determine if angel capital, specifically capital from our group, is right is for your company. Please review our investment criteria.

Our business plan application is designed to extract the most important details about your business. We use the information you provide to decide if your company will be invited for an initial screening presentation, be referred to one of our partners for help in evolving your business plan or be turned down as unlikely to receive funding from our members. The information is uploaded through our password-protected website . You do not need fill in the application in one sitting; our site allows you to save your work and resume later on. We will receive your information once you decide to publish. Changes are permitted once you have submitted. Each month we review 100+ business plans and select eight companies to present at our monthly screening meeting.

After reviewing your business plan, our internal committee will determine if your company could be of interest to our members. If your company is selected, you will be invited to present to the screening committee. Companies that are chosen deliver a ten minute investor presentation and answer questions posed by this group for an additional twenty minutes. On average, eight companies present to the screening committee. The screening committee provides feedback on the strategy, tactics, presentation style, etc. It is suggested that if you are invited to the screening meeting that you submit a non-confidential deck, as guests may be present during the meeting. Four companies are then invited to present at the General Investor Meeting.

Following the screening meeting, four companies are invited to present at the General Investor Meeting. Those that are selected must prepare a 10 minute presentation, followed by 10 minutes of Q&A. The objective is to make the people excited just enough to want to learn more about your business – in a subsequent Due Diligence meeting (should there be any interest), you will have the chance to go into the details of your business with no time limit. It is suggested that if you are invited to the General Investor Meeting that you submit a non-confidential deck, as guests may be present during the meeting. After all the presentations, we excuse the entrepreneurs and have an extensive discussion on each business opportunity. The investors express their interest by filling their contact information on interest sheets, which is provided to the entrepreneurs following the meeting.

The investors who expressed interest during the meeting may form a Due Diligence team and assign a leader to facilitate the process. The entrepreneur is expected to perform an active role in this process, especially if a volunteer to coordinate the Due Diligence has not emerged. During due diligence, interested investors will verify the statements made in your business plan, presentation, and financial projections. They will thoroughly research your team’s background and track record. The persistence and timeliness in following up with the investors will also be an important part of the evaluation process.

After successful completion of the due diligence process, interested angel group members will present a term sheet that defines the structure of the investment deal – including type of equity and board of directors representation, using industry standard terms and provisions.

When all parties are satisfied with the terms and language contained in the term sheet, the deal can be executed. But remember, closing the deal is only the beginning of the angel funding process. Now you have access to a network of value-added contacts and experienced professionals who can provide essential guidance for the growth and success of your venture. Adhering to the responsibilities at this stage will enable you to get the most from your angel relationship.

Investment Criteria

While the merits of each investment will vary, we use the following criteria to help evaluate your venture:

We look for teams of high-quality entrepreneurs with a track record of leadership and performance – either in the company’s specific industry or in prior entrepreneurial ventures. We also look at your team’s passion for and commitment to the new business idea, and your ability to inspire confidence among future stakeholders, including employees, potential customers, and investors. As we will be working together as partners, your team’s credibility is essential. In addition, your team must be open to and comfortable with receiving input provided by angel investors.

We invest in solutions that address major problems for significantly large target markets (i.e. a $200+ million market). Your company must demonstrate a strategy to claim significant share of this market (i.e. 20%+). Clear understanding of the user and the customer is required. There are plenty of great business ideas – but not all businesses will generate returns that justify angel investor and venture capital financing. Therefore, providing a solution to a significant problem with a large potential market is essential.

It is important to clearly demonstrate that there is a “burning” need in the market that asks for solution. The more urgent is the need the better since most customers are preoccupied with work or have limited budgets, they will be able to satisfy their most pressing needs first. Very often companies raising money have developed a product but have not identified clearly the problem in the marketplace that they are trying to solve. Especially with technology, where one and the same product can have many different applications, it is critical to narrow down the focus to the most urgent market need.

We prefer to invest in first-of-a-kind new ideas, rather than incremental enhancements to common products and services. Is this a nice-to-have, or a need-to-have product or service? However, we approach highly complex, esoteric technologies with caution. The concept behind the technology must be proven and verifiable. Further, we avoid science projects that don’t demonstrate a clear path to commercialization. Any breakthrough innovation must be accompanied by a strong business plan.

Funds must be used to accelerate your company’s achievement of key milestones that increase the company’s value. We often fund activities that include research and product development, building a sales and marketing infrastructure and hiring key executives.

We look for companies that can grow quickly and manage the scale necessary to succeed. Your company must demonstrate a plan to generate significant profits beyond the initial product idea. We also require well-conceived financial projections, based on sound assumptions, demonstrating consistent profits and cash flow growth. We typically look for companies with the potential to generate $50M and more in four years, depending on the industry.

Your company must have some proprietary features that distinguish you from potential competitors or provide barriers to entry that prevent other companies from capturing your customers with a similar offering. Attributes that convey competitive advantage include intellectual property protection, exclusive licenses, exclusive marketing and distribution relationships, strong brands, scarce human resources (i.e. knowledge and skills), and access to scarce raw materials.

Our members, all accredited individual investors, have significant executive experience in a variety of fields. One of the benefits of working with angel investors is the active coaching and contact network that such investors can provide. As such, there must be a fit between members of our group and your idea.

We are looking for funding opportunities at the revenue stage or beta version with  customers stage.

We are usually entering rounds for funding between 500k and 1.5mm USD.

Our members are looking to invest in companies with total equity financing needs (including follow-on rounds) <$5M to positive cash flow or acquisition.

For wider discussion on the topic, please review the article “Considering Valuation”.

Our members typically seek returns of at least ten times their initial investment, within four-five years. This level of return on investment is essential due to the high risk and likelihood of failure among early stage ventures. Thus, a clearly articulated exit strategy – how angel investors will extract such returns – is essential. For example, do you plan to sell the company to an established corporation in your industry? Or will your exit be through subsequent rounds of financing – venture capital or the public markets? Angel investors are not just interested in the strategy you select, but more importantly in the how – the operational strategy that shows specific steps you will take to achieve the exit.