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Seed Capital From Angel Investors: Corey Silva, Assistant Manager, River Valley Investors (Part 10)

Posted on Thursday, Jun 17th 2010

By guest authors Irina Patterson and Candice Arnold

Irina: What do you do with the deals that you decide not to invest in?

Corey: I’d say a slim majority of them don’t end up qualifying for our group’s interest. I’d say it’s accurate that less than half of the deals that my brother and I prescreen end up getting to the membership. But it’s not always because they’re not quality deals. Some of them aren’t quality deals. You get some crazy guy who’s got some idea he thinks is worth $20 million.

But really, a lot of times we get deals that just aren’t a good fit for our group, but they would be a fit for other groups. That’s why it’s great that we have this deal flow sharing network with other angel groups to which we pass all our quality deals. Because the same thing happens to them; sometimes they might be looking at some sort of low-tech manufacturing place – a Boston group might get that – and they’re just not interested in that because they’re a high-tech group, but they know we would use it.

So, it’s not so much that the deals aren’t quality investments, they’re just not maybe the right fit for us. But we definitely don’t have a problem with deal flow. I would say the problem is on the opposite end.

There are a lot of months where we have more decent deals than we have members who have the time to look into them. I have definitely seen it multiple times where we have nine, ten, eleven, or twelve new deals that end up getting presented to the group in a month, and these members are so busy, they’re running their own businesses, they’re already looking into other deals.

Irina: What happens to the quality deals that no one has the time to look into?

Corey: I’ll contact the entrepreneur and let that person know. If we decline deals, we always let people know. We try to be very gracious about it. We try to be up front and prompt. If they’re going to be screened, we let them know. If they’re going to be declined, we let them know. We try to point them in the direction of other people who might help them.

If it’s a high quality enough deal, we will usually refer them to other groups. So, we might say Hey, our group just doesn’t have the time right now to look into this deal, but we sent you off to these other groups so feel free to pursue it with them.

Often times we’ll keep them on the line, too. Maybe it will be a situation where our members don’t have time this month, but I know member X is just about to sell one of his companies and is about to get some free time on his hands, and he likes this space.

So, maybe in a month or two months, he will have the time to look at this deal, so we’ll put it on hold as opposed to declining it. And we’ll just let them know, Hey, do whatever you’ve got to do. We know your schedule is not built around us. But if in two months you’re still looking for funding, I think we might have somebody with correct connections and expertise to look into your deal.

We don’t waste the entrepreneurs’ time and travel expenses. We only invite them in if we have at least one member who’s willing to give a thumbs-up and is very interested in the deal and we know is willing to put work in if the entrepreneurs make it to the presentation. It’s definitely important to us to treat the entrepreneurs right. The group is made up of entrepreneurs, so we have a lot of respect there.

This segment is part 10 in the series : Seed Capital From Angel Investors: Corey Silva, Assistant Manager, River Valley Investors
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