By guest authors Irina Patterson and Candice Arnold
Irina: When you invest in e-commerce companies, do they have to be located in your geographical area?
Dick: That’s interesting. The one that exited here was a virtual company. One of the founders was here, one was in Boulder, Colorado, and one was up in New York State.
Officially, the company’s headquarters was here in my town, but their employees and principals were located all over. And the economic focus was here. The management focus was here. Unfortunately, the acquirer moved them to New York City because the acquirer owns about 50 e-commerce companies and they’ve got them all together in this big building in the Bronx where they can all rub elbows with each other.
Irina: Did the founders move?
Dick: Yes. But that’s OK. They left lots of money behind.
Irina: What is the most important thing that angel-backed companies could do to increase their chances of success?
Dick: Work on their team building and recognize that a strong team is a diverse team. They should not all agree with each other. If everyone agrees with each other, then most of them are not needed because it’s the differences among people that turn out to be the great strength. That’s a hard thing for a lot of entrepreneurs to understand. They want to be comfortable with everyone who’s around them. And when you’re trying to do new and unusual things, you can’t do them inside your comfort zone. You have to be willing to get out of it.
Irina: Is there anything that you think can be done to improve the angel ecosystem?
Dick: There’s a lot that can be done. My view of it is that the organized angel groups and the Angel Capital Association have only scratched the surface. But the number of angel groups is increasing rapidly, and they’re beginning to work with each other cooperatively. They’re working toward doing things in a similar way so that they can syndicate easily.
When my buddy in Atlanta produces the same kind of documentation that I do for my members, then it’s much easier for my members to understand what they’re looking at and decide whether to invest. If it’s totally different and they have to figure it out each time, they’re less likely to be interested. The political environment for angel investing is really spotty in the U.S. Some states are very friendly, others are unfriendly.
I live in an unfriendly state, and we have only the two groups here in northern Alabama and one in central Alabama that’s very young and not producing much right now. We have no incentives in the state right now, tax incentives, no funds available from economic agencies to organize the angels. So, our capacity to fund all the available business opportunities is inadequate.
We don’t have enough organized angels to adequately fund all the businesses that could use the money if it was available. We’re organizing a statewide effort to try to organize angels around the state so that we can increase our financial capacity to fund all of the worthy businesses.
Irina: Great to hear that. Thank you, Dick. I enjoyed talking to you.