Seed Capital From Angel Investors: Ira Weiss, Hyde Park Angels (Part 4)

By guest authors Irina Patterson and Candice Arnold

Irina: If entrepreneurs go through your website, there’s still a fee, right?

Ira: Yes. People are not so happy about angel groups that charge fees, but we do charge $45 for people to submit. It’s primarily because we were getting so many random submissions without it.

One of our students will spend 10 to 20 hours on each company that applies, and our angels will spend another five to 10 hours, so there’s a huge amount of time that we spend on each company that applies.

Irina: How are the students’ 20 hours allocated?

Ira: It’s looking at what the competitive landscape is like,  calling the entrepreneurs and getting information about the companies, sometimes verifying the model, anything and everything related to analyzing the company.

It’s understanding the management team, trying to get more information about the background of the management team. Sometimes, early on, making reference calls or even customer calls or checking with some of our contacts.

I wouldn’t say that we spend 20 hours on every company that applies. That’s not true. But we typically spend at least 10 hours on each company and probably more than that on average.

Irina: On average, from all sources, how many pitches do you receive per month?

Ira: We get about 50 a month. We probably get about two a day.

Irina: Out those 50, how many deserve a closer look?

Ira: Probably 15; probably one in three we take a pretty good look at.

Irina: What’s your next step of engagement when you find a company that deserves a closer look?

Ira: We have a screening committee, so our MBA student will put in 5 to 10 hours prepping the company and we will get a member, one of our angels, involved in that process.

So, an angel together with an MBA student will prep the company and then the company will be considered by our screening committee. The screening committee is somewhere between five and seven our members, and it meets once a week.

So, the company gets presented to the screening committee. The screening committee considers the company, and every month we have industry subgroups that have person-to-person, in face meetings and we will typically invite two to three companies to each of those meetings.

We have three or four of those meetings in between our other meetings, and our other meetings are quarterly. So, we have a quarterly full membership meeting and then we have another 9 to 12 subgroup meetings throughout the year. Sometimes a company will start getting funded after the subgroup meeting but, usually, it waits for our full member meeting. That’s the way that our group works.

Irina: When you consider investing in a company, to what factors do you give the most weight?

Ira: The two big things are the founders, which I would say is the management team. So, the people but then it’s also the idea. We really want both to be good.

Some people say, “Invest in an A team that may have a B idea,” and some people are willing to invest in an A idea that may have a B team. Usually people want to invest in the A team with the B idea.

We want a founding team to have two people and we really want at least one of those people to have somewhat of a technical background. We like to invest in really smart entrepreneurs who are extremely persistent. Then it’s an idea in a space that we like. I would say that’s what we end up looking for.

Irina: How many investments have you made in the past 12 months?

Ira: Within the past 12 months the group has made four investments. And I have made an additional three investments that are separate from the group. These are all new investments, not follow-on investments.

The three outside of the group are not in Chicago. If it’s something in Chicago, I’ll only invest in with the group.

But because I was in New York, I have my own deal flow. There’s a company called Bump Technologies that one of our alumni started, it’s based in Silicon Valley, and I invested in that. There’s a company in Boulder, Colorado, called SurgiView and I invested in that. There’s a company in Israel called SafEnd.

I also made a few follow-on investments during the year, too. So, if it’s not in the Midwest, I personally will invest as an angel, but our group won’t invest.

I’ve made investments through my Hyde Park Angels and those are ReTel Technologies. There’s a company called YCharts and another one  Fee Fighters.

Our group made four investments in the past year and I made three of those four.

This segment is part 4 in the series : Seed Capital From Angel Investors: Ira Weiss, Hyde Park Angels
1 2 3 4 5 6 7 8