Seed Capital From Angel Investors: Michael Gruber, Founder and Managing Director, Cornerstone Angels (Part 11)

By guest authors Irina Patterson and Candice Arnold

Irina: What do you think entrepreneurs could do to increase their chances of success?

Michael: One is be incredibly honest and open about everything, both good and bad. You need to establish rapport. After the investment, that’s not the end. That’s the beginning. Typically, a company’s going to need more capital down the road, so you want to be on good terms with your investors. >>>

Seed Capital From Angel Investors: Michael Gruber, Founder and Managing Director, Cornerstone Angels (Part 10)

By guest authors Irina Patterson and Candice Arnold

Irina: Do you co-invest with other angel groups?

Michael: Yes. We’re very open to sharing deal flow with others as well as co-investing with other angel groups, with other individuals, even along with venture firms.

Irina: With the syndication, what size rounds do you usually participate in?

Michael: It depends. For Cornerstone, again, most of the companies we’ll look at are trying to raise between $500,000 and $3 million, which we’ll participate in. We’re not providing all the capital; we’re syndicating, so that decides size of the round. But we’ve been involved in some rounds that have been as large as $100 million. We were part of a syndicate for that. >>>

Seed Capital From Angel Investors: Anurag (Anu) Nigam, President, Sand Hill Angels (Part 6)

By guest authors Irina Patterson and Candice Arnold

Irina: What is Sand Hill’s sector preference?

Anu: It has to have technology or some sense of innovation to it. We’re not going to do a classic consumer goods company or a real estate company.

It has to deal with technology in some way. Mostly, IT, some biotech, some, I’d say, consumer technology, like packaging technology.  [For example], we invested in a company where the guy invented [a way to keep] lettuce in a bag fresh. It’s technology, but it’s used in a consumer way.  There’s technology and innovation there to keep the lettuce fresh for a long time. It’s not just a better lipstick or better soft drink. >>>

Seed Capital From Angel Investors: Michael Gruber, Founder and Managing Director, Cornerstone Angels (Part 9)

By guest authors Irina Patterson and Candice Arnold

Irina: You were talking about alternative energy. Do you have special expertise and connections in the space?

Michael: We have lots of connections in the space, in both industry and academia. But a lot of it is really because my other partners and I – this is when I’m wearing my Independence Equity hat – have spent so much time with all of these different companies in areas in which we know a lot or, at least, are able to get at the critical questions.

So, that’s why when we look at alternative energy, depending upon how you break it down, we’ll get there, and then if there are any specific, hardcore questions about either the IP or other technological questions, we’ll get additional scientific help or support for certain areas. >>>

Seed Capital From Angel Investors: Anurag (Anu) Nigam, President, Sand Hill Angels (Part 5)

By guest authors Irina Patterson and Candice Arnold

Irina: What are other important factors for you when you make your decision about any particular entrepreneur?

Anu: One of the biggest factors is, Is this something you’ve done before? Are you someone who’s worked at Oracle and is now doing a database company? Do you know the space very, very well?

Other factors are, When you see the team, are are they hard working? Are they taking salary cuts and taking risks? Are they putting their own money into play? What are they willing to do to make this company succeed and return you an investment on your money? >>>

Seed Capital From Angel Investors: Michael Gruber, Founder and Managing Director, Cornerstone Angels (Part 8)

By guest authors Irina Patterson and Candice Arnold

Irina: What do you usually allocate for interns to do?

Michael: It depends on the timing of the work. A lot of it is helping out with the screening of companies. Some of the stuff is helping with logistics at our meetings. Also, some of it is helping out with market research when we’re conducting due diligence.

Irina: What is your investment sector preference?

Michael: Most areas, except no life sciences, no biopharma. Areas that we do like for Cornerstone are Internet/software, we like the clean tech energy space, we like manufacturing. We’d look at some business services, we’d also look at some consumer food and beverage deals. For Independence Equity, as I mentioned, we’re very much focused on clean tech energy and sustainability, so a lot of things relating to advanced materials, alternative energy, things related to waste, waste recycling, things relating to water. >>>

Seed Capital From Angel Investors: Michael Gruber, Founder and Managing Director, Cornerstone Angels (Part 7)

By guest authors Irina Patterson and Candice Arnold

Irina: Can you tell us a little more about your VentureLab?

Michael: That’s a separate organization. That’s an organization where we’re directly hired by companies to do a variety of services. It’s like any investment bank or professional services company. We’re working with a company and taking a fiduciary role of working with them and actively building the materials or contacting investors and managing the entire process.

That’s a separate thing, totally separate from Cornerstone, although there may be some synergy where some companies that go through Cornerstone may become VentureLab clients, or some VentureLab clients may find a way, and there may be interest from the members to see them.

We get paid to work with these companies as interim executives or advisors in trying to find capital or selling or buying companies on their behalf. >>>

Seed Capital From Angel Investors: Anurag (Anu) Nigam, President, Sand Hill Angels (Part 4)

By guest authors Irina Patterson and Candice Arnold

Irina: Do you think about the return you would like to have over a certain period?

Anu: We’re different from a VC firm in that we don’t have IRR [internal return on investment], and we don’t have LPs [limited partners]. It’s our own money. >>>