BK: What are the Pasadena Angels all about- what's the purpose of the group?
DP: The Pasadena Angels is a group of suitable investors (SEC term) that have the capacity and desire to invest both time and money in technology start-ups. We have three purposes
i. Provide mentoring and support for entrepreneurs
ii. Help the local economy by encouraging companies to stay and grow in the greater Los Angeles area, with emphasis on the San Gabriel Valley
iii. Make a satisfactory return on money invested in these start-up companies
BK: Who are your typical members, and how big is your group?
DP: We have approximately 90 members. It is difficult to describe a typical member. They are all ages, some are retired and some work full-time. Over half of the members have had operating management experience and a high number have strong technical experience. We have a large number of financial and investment people plus some excellent Intellectual Property legal experts. A well-balanced membership.
BK: What companies have the Pasadena Angels invested in recently?
DP: We have invested in 21 companies and are actively considering 4 more.
Some of the most recent investments are as follows:
i. TRI-D Systems- a Pasadena company that has developed a system to solve the ID authentication problem in enterprise information technology systems by using a unique biometric ID, the fingerprint, on a credit-card device that along with a password provides a private, portable and practical solution.
ii. Bluebeam- a Pasadena company that provides high-end PDF solutions for the Computer-Aided-Design (CAD) community and the unique requirements of the architect and engineer.
iii. LeisureLink- an Altadena company that provides the first reservation and distribution system for the vacation rental market.
iv. DAX- a Los Angeles company that provides digital asset management solutions to help Film and Television production companies and Advertising Agencies share resources, manage, distribute and collaborate in a friendly secure on-line environment from anywhere in the world.
v. Phatnoise- a Los Angeles company that provides digital media solutions to the automotive industry.
BK: What kind of investments does your group make, and what do you look for in an investment?
DP: We only invest in technology companies, mainly information technology, but we are very interested in applied life sciences companies.
The factors we consider when evaluating a company are as follows:
i. The Company addresses an important problem.
ii. The Company offers a good solution to the problem.
iii. Many people have this problem.i.e. there is a large market.
iv. The Company's solution is better than competitors.
v. The Company has made good progress.
vi. The Company has a sound plan for the future.
vii. The Company has the people who can execute the plan.
viii. The plan provides a reasonable return for the investors.
BK: How did you get involved with the Pasadena Angels?
DP: I started working with and investing in start-ups in 1991 when I retired from corporate life. I observed the beginning of the angel group movement in the late 90's and initially entertained joining the Tech Coast Angels. However they were located in Santa Monica and I lived in the Pasadena area and believed a group could be established in the San Gabriel Valley. So with 10-15 others we started the Pasadena Angels in the summer of 2000 and I have been the Chairman since that time.
BK: What's your sense of the recent funding market- where do you think the market is right now for funding a new company?
DP: The venture capital firms seem to have stabilized their funds and have money to invest. However, it is still difficult to get them interested in start-up companies. Either because of the funding need is below their threshold or they do not want to take on early stage risk. There are a few firms specializing in early stage who work very well with angel groups.
BK: Finally, what advice would you give entrepreneurs who would like to obtain funding for their company?
DP: First, prepare a clear and concise business plan that covers the items I have already discussed.
Second, clearly articulate your funding requirements. The funds obtained from angel groups will be very expensive due to the risk they are taking on, especially for a pre-revenue company. However, you need to raise sufficient funds to achieve significant milestones i.e. develop prototype, gain customer traction, etc so that subsequent larger rounds can be at higher valuations.
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