Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Dennis Joyce of Alliance of Angels was recorded in March 2018.
Dennis Joyce, Investor and Member of Alliance of Angels, talks about the largest angel group in the Pacific Northwest.
Sramana Mitra: Tell us about your investing focus. How does the Alliance work? What is the focus? What sized investment do you like to make?
Dennis Joyce: The Alliance of Angels is the largest angel investment network in the Pacific Northwest. We have a rotating membership of roughly 145 members. Probably, about 10 times as many people have come in and out of the organization and are connected to the network. It’s a very vibrant community. We meet once a month.
We typically screen roughly 35 businesses per month. What we do is we run their top seven through a bigger screening process and then we invite our top three or four companies to our monthly luncheon. From there, the companies present and our investors will break out based on their interest and perform due diligence on the companies that each member is interested in tracking.
It’s very much a member-led process. It’s decentralized. We provide each member an opportunity to not only get deal flow but also to make individual decisions and write their individual checks. We are accredited investors. We collaborate with each other, but then we think independently.
Sramana Mitra: What sized investmetns does the group like to make?
Dennis Joyce: A successful round is a company that is raising in between $500,000 to a million dollars. It’s your first institutional investing work. It’s usually a company that has a full-time team in place and needs to raise some money to get their product out to market and get sales.
They need some finance to fuel their next 12 to 18 months of operations. That’s a good fit for us because we want to work with a company that is operational and working on it and not just theoretical. We want to be able to provide as much help and resources as the company needs in order to get to the next level.
Sramana Mitra: What validation do you want to see in the ones that you do choose to invest in? Are you looking for customers? Are you looking for pre-customers? What is the sweet spot?
Dennis Joyce: As investors, we are balancing thousands of patterns. We are trying to match different patterns. There are risk factors. When I look at a company, I’m balancing all the different ways that this company is going to run into problems. I’m looking for the founder of the company to show me that they are capable of mitigating these risk factors one by one.
When I’m looking at a business plan, I’m trying to fit the idea into its marketplace. Then I’m trying to say, “Here are the risk factors in that marketplace. How is this founder going to tackle that?” Are they going to charge enough money to make a living at this? Is it easy for them to acquire customers? Is this a huge marketplace where they’re capable of making $10 million to $50 million in revenue per year?
I’m looking at those types of opportunities and then risk factors. I’m looking for companies that are going to be able to get lots of revenue. I’m looking for a team that’s capable and has deep domain experience. I’m looking for a huge revenue opportunity. Those three drivers are going to take a company very far.