Revenue-Based Financing (RBF) For Entrepreneurs: Andy Sack, Co-Founder, RevenueLoan (Part 3)

By guest authors Irina Patterson and Candice Arnold

Irina: What kind of businesses do you prefer?

Andy: Think of revenue loan as growth capital for small to medium-sized businesses. The demand for that growth capital is really high. There aren’t many sources of growth capital other than traditional venture capital, sometimes angels. So, there’s a lot of demand. Probably the biggest filter is a gross margin and a clear revenue model. >>>

Revenue-Based Financing (RBF) For Entrepreneurs: Andy Sack, Co-Founder, RevenueLoan (Part 2)

By guest authors Irina Patterson and Candice Arnold

Andy: What we look for are companies that have figured out – no matter what their size is – how to make money in one way or another. They basically have what we call a revenue engine, and what’s lacking is they need capital to rev that engine. We look for those opportunities.

When we find them, we make a determination about the amount we would like to invest. Our investment amount is generally $100,000 to $500,000.

We are in the process of looking at a deal larger than that as well. We’re considering doing up to $1 million. But right now, our stated focus is $100,000 to $500,000. So, we filter through the leads that come in.

We decide on a company that we want to invest in, and then we issue them a term sheet, which articulates the amount that we would invest as well as the target RevenueLoan term and the target RevenueLoan cap. >>>

Seed Capital From Angel Investors: Brian Cohen, Vice Chairman, New York Angels (Part 9)

By guest authors Irina Patterson and Candice Arnold

Irina: What other opportunities do you offer for university students?

Brian: I wanted to have more collaboration with students, bright students, MBA students – preferably in these cases. So, I created the Future Angels. Now, every meeting, every month, we have the top schools in New York give us their best students, who sit with all the angels in the angel group meetings, listening, participating, and offering their input. It’s really exciting. >>>

Seed Capital From Angel Investors: Brian Cohen, Vice Chairman, New York Angels (Part 8)

By guest authors Irina Patterson and Candice Arnold

Irina: What can angel groups do better?

Brian: I think there are a variety of things that angel groups can do better. They could – I would say, most important – make it clear to the entrepreneur what their ability is to actually fund him or her. That’s a very deep point.

I think an angel group should be more upfront with entrepreneurs about what they’re capable of funding and what they’re not. I think it also behooves the entrepreneur to question the angel group on that issue. Have you funded companies in this area? They should ask this question.

I think there’s a certain kind of development relationship early on with an entrepreneur that, for example, in the screening, they should know up front [whether] we’re curious or we’re interested.

There’s a big difference between the two. I think the entrepreneur is the most important person in the room, of course, and that lends itself to even more understanding of the process and what can be achieved out of it. That’s the relationship with the entrepreneur, giving them that transparency of what the real possibilities are to fund them at various levels. >>>

Seed Capital From Angel Investors: Brian Cohen, Vice Chairman, New York Angels (Part 7)

By guest authors Irina Patterson and Candice Arnold

Irina: How do you feel about entrepreneurs who drop out of school to build their companies?

Brian: I think, for the most part, entrepreneurs have to be educated. There’s no turning away from the fact that a good education represents curiosity and a desire for personal advancement. There are always exceptions to the rule, but I think you have to stick with the tried and true talent that comes from smart people excelling at various educational institutions.

That doesn’t mean it’s from a name school, by the way. You know, you come from City College of New York because you couldn’t afford to go to an Ivy League school. High ntelligence is something you can find in a variety of colleges. >>>

Seed Capital From Angel Investors: Brian Cohen, Vice Chairman, New York Angels (Part 6)

By guest authors Irina Patterson and Candice Arnold

Brian: They say in the angel business, the real problem companies are the ones that keep existing. They don’t go up; they don’t go down. They just stay in place.

That’s why it’s so important to look for companies that do have the opportunity for scalability. But there’s no real way to answer the question about how long an exit takes for us. It’s pretty much how the company performs.

If we invest wisely, as we do – as we learn to do – we see where the exit could be at the day of the investment. That might makes the exit more clear as an opportunity, but it doesn’t necessarily make the timing any more predictable. >>>

Seed Capital From Angel Investors: Brian Cohen, Vice Chairman, New York Angels (Part 5)

By guest authors Irina Patterson and Candice Arnold

Irina: In the past 12 months, how many new investments has New York Angels made?

Brian: I’m going to say probably eight, which I hear is pretty good during a recession, and maybe five or six add-on investments.

Irina: Can entrepreneurs who are not based in New York pitch to your group?

Brian: Yes, but they would have to come to New York. We really want to meet them, we have to see them. They don’t have to be [based in New York]. It’s nice if they are, but if they’re not, that’s OK, too. >>>

Seed Capital From Angel Investors: Brian Cohen, Vice Chairman, New York Angels (Part 4)

By guest authors Irina Patterson and Candice Arnold

Irina: So, you run the educational workshops for entrepreneurs as part of your work for New York Angels?

Brian: Yes. We started a New York Angels meet-up group in New York City, and we’ll have ongoing educational workshops.

Irina: How often?

Brian: New York City is a complicated place, so the number of activities that take place can be overwhelming to anyone.

Some of the workshops are ones we do ourselves, which we can control. We have Wilson Sonsini, one of the leading law firms in the space, as our sponsor and partner. They do ongoing workshops, so we collaborate with them on term sheets, design, and developments. We invite our angels and entrepreneurs to those. >>>