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Seed Capital From Angel Investors: Kiki Tidwell, Board Member, Northwest Energy Angels (Part 4)

Posted on Saturday, Dec 4th 2010

By guest authors Irina Patterson and Candice Arnold

Kiki: We try to direct people if we know that there’s a particular grant opening, but, generally, we wouldn’t be the best source for being the repository of all that information.

Irina: What is the best way to learn about cleantech grants?

Kiki: I would go to the states’ energy departments. I would search online. Sometimes it’s worth hiring attorneys, like Stoel Rives, to expedite the process and help an entrepreneur actually get funding or find the most appropriate grant. An entrepreneur might spend a lot of time spinning wheels and not getting funding, where the attorney could make all the difference.

But it has to be an attorney like Stoel Rives who specializes in clean tech, not just any attorney. They keep up to date on the most current information and most current programs.

Irina: You said you invest convertible notes. Is there any other type of investment you do?

Kiki: Yes. We invest in preferred shares. Sometimes people invest in an LLC. Members join together and form an LLC, and then the LLC negotiates the equity position.

Irina: What is your usual way of exit?

Kiki: The majority of our companies are acquired rather than go to IPO.

Let me tell you about a company that’s an example of why we fulfill a particular niche in the entrepreneurial ecosystem. There’s a company called EnerG2, and it was a technology developed in the University of Washington labs. Experienced entrepreneurs came in, looked at this technology, and wanted to roll it up into a company.

So, you had experienced entrepreneurs connecting with great technology, and they came to Northwest Energy Angels for seed funding. Some of our members invested in them and from there, they were able to go on and get venture capital funding and government grants.

They are now building their first facility in Oregon, so we bridged that gap between university technology and venture capital and provided them with a platform so that they could develop long enough to be able get the government grant funding. Now they’re probably going to be acquired in several years. They’re a really a well positioned company.

Irina: What would you say is your biggest investment success to date?

Kiki: Well, I would say, it would be EnerG2 and companies like Brammo, which is an electric motorcycle company also in Oregon. It’s also secured several series of follow-on investments. The team is hitting their milestones.

Irina: What could entrepreneurs do better, if anything?

Kiki: I guess, they could be more realistic about their valuations when they start a company, and really understand what it’s like to be an angel investor and put your own money on the line.

[They could] put themselves in the shoes of the angel investors. Would they loan money to somebody else, with this particular idea, out of their own pockets?

We’re making hard choices in giving them our own money over other things that we could be investing in.

A venture capitalist is much more focused on large funds that they raised and need to deploy. There are going to be some winners and some losers. This is an allocation they know they are going to be doing. It’s going to be in venture, whereas we as angel investors have a choice. We could put it in real estate; we could put it in art; we could put it in security investments. So, we’re making a personal decision with each investment.

We really are trusting the entrepreneurs to do what they say they’re going to do. I think the entrepreneurs really need to be honest with themselves [and] be honest with their investors.

Irina: What do you think angels could do better, if anything?

Kiki: I guess we could do a better job of staying connected with our companies and helping them. We definitely try to, but we may not be as disciplined about that as venture capitalists are. Venture capitalists usually get on the boards of companies and get very active in hands-on management.

Angels, for the most part, tend to invest and sit back and wait. We could do a better job, learn from the venture capitalists, and open up our Rolodexes and say, “What can we help you with? Are you needing a suggestion for how to reach this market or roll out this product? Where can we be of help to you?”

This segment is part 4 in the series : Seed Capital From Angel Investors: Kiki Tidwell, Board Member, Northwest Energy Angels
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