By guest authors Irina Patterson and Candice Arnold
Anu: Around 2006–2007, I ended up starting another company called 411Sync, which was doing mobile search. It did OK, but it didn’t go anywhere. And then I spent a year and a half trying different things.
Now I’ve been on my new company since May 2008. It’s called BuzzBox, and it does personalized news alert applications for cell phones.
The first year we did something different, so I kind of tossed out an idea that didn’t work. May 2009 was when we started the new incarnation of the company. So, basically it’s giving you notifications of things that matter to you and trying to be the first point of contact to the Internet in your day-to-day life. That’s my entrepreneurial hat.
For the angel investing hat, I started investing early. Sona was one of my first investments, and I’ve put money into over 45 deals in the past eight to nine years.
I’ve written more than 70 checks, so a lot of follow-ons have happened. And I’ve had some successes and some failures in angel investing. I’ve learned a lot of hard lessons. What ended up happening was around two or three years of angel investing, I realized it was better to be part of an angel investing group because I could learn from the group.
So, I joined the Sand Hill Angels around 2004 or 2005, and now I am the president and am on the board. We pool our money together and invest together. I think our biggest attribute is most of us are active people in the tech community, either doing startups or high-level execs who are trying to invest and give back.
So, the advantage of the group is we share deals, we share our knowledge and skill sets and we invest money together, too.
Irina: What was your first angel investment?
Anu: I think the first one was 2001 or 2002. It was my very first deal. It may have been even earlier, I really don’t remember. But I did very few deals in the beginning, then I picked up the pace.
Irina: And that’s when you were investing individually?
Anu: Yeah, basically investing in deals that would come from friends or friends of friends or things that seemed interesting.
Irina: How long have the the Sand Hill Angels been in existence?
Anu: They’ve been in existence for about 10 years.
Irina: What is their structure?
Anu: It is technically a non-profit, but then it’s a dinner club, you could say, where we see deals. And then there are membership dues.
If there’s a deal that is of interest to the members, we create a limited liability company (LLC) per deal, and the group invests together in each LLC. But it’s individual. We don’t force anyone. If there’s a deal you like, say, if five members like this deal, we create an LLC for that deal. Every investment is a different LLC.
The LLC gets money from individual investors. It invests in the company and it gets shares from the company. The investors write individual checks to the LLC, and the LLC writes one check to the company.
Irina: What is the geographical focus of Sand Hill Angels?
Anu: It’s Silicon Valley. I want to say that 95% of the deals are in Silicon Valley.
Irina: Where do you get your deal flow?
Anu: Mostly from the members and from the website where people can submit applications. We also get referrals from service providers, venture firms, friends of the organization, or individual members.
Irina: How many deals do you get, approximately, per month?
Anu: We get around, I’d say, 50. It varies.
Irina: How many of those deserve a closer look?
Anu: We have a pretty open process here. We have a phone call once a month, and we review the deals. Anyone can look at these deals and rate the deals. The deals that are rated the highest or the ones a member wants to take further are talked about in our monthly phone call.
In the monthly phone call, we whittle down those deals that came in that month to six, which we bring to a screening meeting that happens the last Thursday of the month. And then the following second Thursday, we have our dinner meeting, and the six will get whittled down to two or three that present at the dinner meeting.
At the dinner meeting, if there’s at least a soft circle interest of $100,000, further diligence is done. The diligence can take a long time or a short time depending on if we’re giving the first term sheet or if a term sheet’s in place.