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Seed Capital From Angel Investors: Randy Williams, Founder and CEO, Keiretsu Forum (Part 3)

Posted on Thursday, Jun 10th 2010

By guest authors Irina Patterson and Candice Arnold

Randy: So, getting back to our revenue model, it’s membership, renewals, and then we rely on sponsors to help us grow and underwrite our employees. Finally, we charge an administrative fee for companies to present, and that fee – in smaller chapters it’s less and in robust chapters it’s more because of the employees and the cost of growing the forum – is approximately $1,500. That’s to present to one chapter. The results we’ve created through this model are, first, it’s a sustainable model, and second, it’s a repeatable model; there is money that is made to underwrite our growth and our employees. And we take a little bit of money from the myriad of sources to which I just alluded – sponsorship, membership renewal, and an administrative fee when a company presents of $1,500 at the forum. There’s no charge for presenting at screening day. And that [fee] can be much less for a newer chapter. For instance, if we just opened a chapter – pick anywhere in the United States – we may have a free component for a year for companies to present to us. So that’s the revenue model of Keiretsu Forum.

Irina: When you say companies present, you mean live presentations, correct?

Randy: That’s correct.

Irina: You consider yourselves an international forum, right, since you have chapters internationally?

Randy: We’re on three continents with 19 chapters.

Irina: Tell us about your deal flow. How do you get your deals?

Randy: Great question. The entire spirit, the whole secret sauce of a robust angel group is to grow membership, and we’re very fortunate to have a robust membership locally, domestically, and internationally. And so, [the reason] why groups may or may not do well is because they have a deep and engaging membership. I will focus on Northern California for a moment. We have 360 members in four chapters here, and so the secret sauce and where the deal flow comes from is not from me – yes, I’m a proud member of Keiretsu and yes, I’m the founder and CEO – but if you have an engaging and participatory membership, there is where the deal flow comes from. And so typically, each month we have approximately 50 companies come to us from our membership. And the whole spirit of Keiretsu is, yes I might be the founder, but I’m only one decision maker. So, the decision making process at Keiretsu Forum has been stratified carefully over the past ten years to include every single member of the forum. And so with the entire process of 50 companies coming [per] month, only four or five will actually make it to the forum because we have a process in place set up through ten different committees, from software to clean tech to real estate. The companies come to the committee system first, and the committee system votes on which companies make the next level.

So, a company goes to committee first, then it goes to screening day – and usually 30 members are at screening day – and then a week before the forum, some of those screening companies are chosen make the forum. So, 50 down to 10 for the screening day, and then usually four or five companies, historically, every month for the past ten years, have made the forum. So those companies then do a formal presentation to approximately 325–375 members and guests – every month – here in Northern California. What we’ve created here is an efficient, monthly private equity road show for entrepreneurs that has been going on for ten years and will go on for the next ten years. We care deeply about supporting entrepreneurs with capital, but we also care deeply about giving the companies resources, which we can talk about a little later.

This segment is part 3 in the series : Seed Capital From Angel Investors: Randy Williams, Founder and CEO, Keiretsu Forum
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