By guest authors Irina Patterson and Candice Arnold
Irina: What would you say are the key points that make Keiretsu Forum stand out from other angel groups?
Larry: It’s the breadth of our investors. If a company does well in one chapter, other investors in other chapters also want to see them and possibly invest in them. So, I think it’s the multi-chapter access, and it’s also the makeup of the investors.
They’re former executives in companies, so a lot of them are former CEOs of Fortune companies. You’re not just presenting to a group of fifty or seventy investors and that’s it. You really could have access to 850 investors and also investors across the globe, not just in the United States.
Irina: In your chapter, what are your current sources of deal flow?
Larry: Good question. A lot of them are from referrals, entrepreneurs who have already been through the Keiretsu, and a lot of them are from our advisors. We’ve got a law firm, Reed Smith. It’s a pretty big international law firm, so we get deals from them. We’ve got a regional certified public accounting firm called Citrin Cooperman, so they give us a lot of deals.
Also, we share deals with other angel groups. We attend a lot of entrepreneur events, and I’m a frequent speaker and panelist at venture capital conferences and at The Levin Institute in New York City, where I speak to groups of entrepreneur students on how to prepare an investor presentation. We’re always looking for the best entrepreneurs to present to the investors.
Irina: Out of all these sources, which are the best so far?
Larry: You know, it’s kind of spread evenly. I went to an event last week that was a clean tech event, and I met two entrepreneurs who are qualified to present. Through other law firms and CPA firms we get referrals. It’s really evenly split. Out of, say, fifty business plans, probably five to eight come across all the different sources – five to eight per source.
Irina: Is there anything you could think of that might improve your deal flow?
Larry: Our deals sources are pretty good. We’ve been getting good, qualified entrepreneurs. We work with them on the presentation but, by and large, they are good.
Irina: What are your daily challenges as an angel investor?
Larry: I think, always looking for more and qualified investors. So, my goal is to have one hundred investors in the room. We’re now between fifty and seventy-five. On the West Coast, they’ve been in business for some time – Randy’s been doing this for ten years. He’s got four chapters. Each chapter has at least one hundred investors. So, that is our goal. We’ve been around less than a year and a half and we’ve got fifty to seventy-five investors who come to our meetings. I’d like it to be over a hundred. We’re getting there, but it does take time to grow a chapter.
Irina: What is the best way for entrepreneurs to reach you?
Larry: Probably the best way to initially reach us is through the Keiretsu Forum website, and then go to the New York chapter and our phone number and e-mail address are there. I get back to people by at least the next day.
What we would like is for them to send us a one- to two-page executive summary and their investor presentation, if they have one.
Irina: On average, from all the sources, how many pitches do you receive a month?
Larry: Probably fifty. We’re looking for companies that have revenue or are just about to have revenue. We don’t look at start-ups at all.
Irina: Out of fifty pitches a month, how many deserve a closer look?
Larry: About six to eight.
Irina: What is your next step after you’ve found a qualified pitch?
Larry: We evaluate them internally, and we created an advisory board. So, we’ve got five members on our board and they range from legal, financial, marketing, PR and branding. We all take a look at the applications.
We usually select the top eight to ten of the companies to come in for a CEO preparation meeting, and it’s our advisory board and me in our internal group. The entrepreneurs will present to us and then based on their presentations, we’ll select the top six to eight to come in to present at a deal screening. Eight companies present at a deal screening, and then they’re voted on and three to four return the following week to the forum.