BK: Tell me a little bit about the Tech Coast Angels for those readers who aren't already familiar with your organization. Who are you and what do you do?
LV: Before answering that, let me first mention that people should visit our website to find out about our upcoming Fast Pitch event, where the 3 winners get a funding meeting with a leading VC firm, and is an excellent opportunity to network with dozens of angels and VCs www.TCAFP.com.
Now to your question - Tech Coast Angels is a network of individuals who invest their personal capital in, and help to accelerate the success of, emerging companies throughout Southern California. Our 200 individual investor members are based throughout Los Angeles, Orange County and San Diego. As active angel investors, each of us is committed to investing a minimum amount of our own money and time in Southern California companies that have the potential to grow into market leaders.
We're one of the largest and most active groups of angel investors in the United States and, in total, have invested more than $45 million of personal capital in 63 Southern California companies since our founding in 1997. Equally important, the companies in which we have invested have received an additional, $456 million from co-investors (other angels and institutional investors), bringing the total investment in emerging Southern California companies that we are supporting to more than $500,000,000.
Tech Coast Angels' core strength lies in the high caliber experience of our members; more than 60 percent are former CEOs, and almost all are experienced in founding, financing and building successful companies. Qualcomm, EarthLink, DIRECTV, Gemstar, Emulex, GameSpy, FileNet Hybritech and Krispy Kreme are a few of the successes in which our members have been involved.
It's important to understand that Tech Coast Angels members invest much more than money in the companies they support. In fact, many of us dedicate 20 hours or more per week, to monitor the ventures we fund, mentor and coach their entrepreneurs, serve on their boards, provide them contacts and assist with team building, strategic planning and subsequent fundraising.
We also recognize that institutional investors are a critical partner for the success of our portfolio companies, so we have very strong relationships with VCs in Southern California. In fact, twenty-two of the leading VC firms with offices in the Tech Coast area are VC Affiliate members of Tech Coast Angels.
BK: What's your upcoming Fast Pitch event all about?
LV: The Fast pitch is all about showing some of Southern California's "diamond in the rough" ventures how to shine.
Nothing may have more impact on the chances of getting funded by angels or venture capitalists than a company's ability to capture an investor's interest in less than a minute -- that's what we call "the fast pitch."
There are a lot of "diamond in the rough" companies out there that go unnoticed simply because they are not skilled in articulating what they're doing in a way that that will capture an investor's interest.
Our annual Fast Pitch competition, taking place the evening of Monday, May 12 at the Irvine Hyatt Regency, is all about learning or experiencing the art of a fast pitch as well as an exposure to new funding opportunities for angel investors and VCs. More than 70 competitors will have been narrowed down to 15 finalists who each deliver their 50-second fast pitch presentation that night. They will be judged by a panel of investors and industry experts.
The attendees get to see a wide range of fast pitches, and see first-hand what make a great pitch. The 3 winners get a funding meeting with a leading VC firm (Palomar Ventures, Miramar Venture Partners and Odyssey Venture Partners) in the region. They also get coaching sessions from Tech Coast Angels and to present at TCA screening sessions. I should mention that our Fast Pitch event immediately follows the 19th Annual Entrepreneurs Conference that is hosted by the Harvard Business School AOC; it is our community service event for the year, and has become the premier event for entrepreneurs, investors and networking in Orange County.
BK: What kinds of companies are you getting who want to present at Fast Pitch, and what kinds of companies are you seeing in general looking for funding today?
LV: Any company that is looking for angel or VC funding should consider participating in the competition; as the opportunity for exposure to angels and VCs is exceptional - it is very difficult these days to get a funding meeting with a VC (and the 3 winners are guaranteed such a meeting).
Most of the bubble chaff is gone, and we see experienced entrepreneurs, with proven models, often with revenues and some even with earnings. The valuations are much more modest across the board; pre-revenue at $1 million or less, and those with revenue at 1x (or less) of trailing revenues. The exit valuations - mergers and acquisitions, because there are no IPOs these days - are also much lower ($30 million to $300 million vs the bubble exit valuations in the multi billions).
BK: Do you think the role and activity of angels has increased or decreased in this economic environment?
LV: The value and role of angel investors is more important than ever in the current economy. Tech Coast Angels are a key source of support for budding firms that are not yet on the radar screen of institutional investors. It's interesting to note that some of the most successful companies today, including Cisco, were initially funded during challenging economic times such as these.
For us at Tech Coast Angels, our central activity (funding) continues pretty steady, and we fund an average of one venture per month. We have funded 63 ventures in our first 63 months, and last year we funded 12. The number of ventures seeking funding has dropped as has the average amount of funding in a given round.
BK: Finally, what do you think the most beneficial part of working with a group like the TCA, and your funding events like Fast Pitch?
LV: Tech Coast Angels is a primary conduit to funding and mentoring for emerging companies in Southern Calif. Other sources of angel capital are around, but usually unorganized. TCA provides a clearly defined criteria and processes for entrepreneurs seeking funding and mentoring. The high caliber experience of our members has proven valuable to virtually any company that approaches us.
Tech Coast Angels are value-add investors. While we do provide capital, the experience we can contribute, advice we can offer and the contacts that we bring (for finding additional key team members, or strategic relationships, or technology, or subsequent round funding) often outweigh the capital we provide. We are very active investors, providing advice and mentoring and lots of relationships.
Attending Tech Coast Angels events provides an unusual opportunity to meet and network with dozens of our members and VC Affiliates, and to develop relationships with other entrepreneurs.