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Seed Capital From Angel Investors: Corey Silva, Assistant Manager, River Valley Investors (Part 6)

Posted on Wednesday, Jun 16th 2010

By guest authors Irina Patterson and Candice Arnold

Irina: How many investments have you made in the past 12 months?

Corey: Good question. I would say in the past 12 months, we’ve probably done maybe four deals, maybe five. I think there was a follow-on round with one of our portfolio companies.

Irina: Do you invest in roughly four or five deals a year?

Corey: I’d say on a yearly basis, it’s somewhere in the ballpark of three to six.

Irina: How much money do you usually invest per deal?

Corey: Big, big variety. Like most angel groups, we’re usually talking about deals that are looking for $500,000 to $1 million.

But that’s only when we’re investing on our own, because we syndicate deals very often with other angel groups. And when we do that, we have access to so many other groups and investors that we can do much larger deals: $2 million and $3 million rounds are pretty easy to put together when it’s a syndicated effort.

Irina: And how much per individual angel investor?

Corey: Individual investors? I’d say it’s usually between $10,000 and $75,000, the individual portion. But, like I said, there are a lot of exceptions to that.

There are times when a really deep-pocketed guy would just throw in $100,000 or $200,000 of his own money. That certainly happens, but your average member of the group is putting in $10,000 or $25,000, or $50,000 at the most.

Irina: You do first money, and you also do follow-up investments, right?

Corey: Sometimes. Again, it’s a case-by-case thing. Sometimes we have follow-on rounds and sometimes the same people get involved again. Sometimes they don’t. It really depends on the progress of the company. When we have companies that are hitting their benchmarks and are performing, then we’ll always go in for the follow-on round. If you have a group that’s under-performing and it’s looking like maybe that was a mistake, obviously, they’ll shy away from getting involved again.

Irina: How long does it take for a company to get funding from your group?

Corey: Again, a lot of variety. I’ve seen a company get money in three weeks after their presentation, but more often, it takes two, three, four, or five months, and every once in a while, you’ll see something stretch out even longer than that. It varies a lot.

Irina: What is the typical valuation of the companies when you invest in them?

Corey: Again, that varies a lot, too, but they certainly are usually looking for things with smaller valuations like $1 million or $2 million. They would really shy away from high-valuation deals. There are certainly individual members who are very aggressive and less conservative than the group – again, not politically speaking, but economically.

But in general, I think, it tends to be a more conservative group than your average group. I don’t think they’re quite as aggressive or quite as interested in the “home run” type deal and really going out on a limb as maybe some of the Boston groups are. Even though there are individual investors in the group who are like that, I think, as a group in general, they really try to avoid the high-valuation deals.

Irina: What percentage of equity in a company do RVI investors usually want?

Corey: Again, a lot of variety, but I’d say they certainly  try to get 25% or more. I’d say a third of a company is a good general benchmark. They’d like to own that much of a company if they’re going to get involved.

They want to have a member of our group sitting on the board in all cases, and they want to have a significant share because they don’t want to be passive investors, just hoping things work out. If they’re going to invest in a deal, they want to be hands-on, they want to introduce the team to their own connections, they want to improve the team. They really want to be hands-on, so they need to have a significant share.

This segment is part 6 in the series : Seed Capital From Angel Investors: Corey Silva, Assistant Manager, River Valley Investors
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