Seed Capital From Angel Investors: Elizabeth Marchi, Frontier Angel Fund (Part 1)

By guest author Irina Patterson

This is the twenty-eighth interview in our series on financing for entrepreneurs. I am talking to Elizabeth Marchi, fund coordinator at Frontier Angel Fund LLC. It’s a member managed pooled fund – that is, they review deals together and then vote to invest their pooled capital. Their investments range from $100,000 to $200,000 and they invest in companies based in Montana and the inland Pacific Northwest. >>>

Seed Capital From Angel Investors: Raymond Chan, Tech Coast Angels (Part 6)

By guest author Irina Patterson

Irina: What do you think is the most important thing that angel-backed founders can do to increase their chances of success?

Ray: The execution. It means you have to work with partners — work with partners like us, work with the team, and execute the plan. They also be able to change on a dime if things don’t go right, to be able to change the plan. I think that is very important.

Also, I would say, entrepreneurs have to be flexible. Because as entrepreneur you hear a lot of different opinions and ideas. You just have to be able to intelligently absorb all of these ideas, understand them, apply them, and see what works and what doesn’t work. >>>

Seed Capital From Angel Investors: Dick Reeves, Executive Director, Huntsville Angel Network (Part 6)

By guest authors Irina Patterson and Candice Arnold

Irina: When you invest in e-commerce companies, do they have to be located in your geographical area?

Dick: That’s interesting. The one that exited here was a virtual company. One of the founders was here, one was in Boulder, Colorado, and one was up in New York State.

Officially, the company’s headquarters was here in my town, but their employees and principals were located all over. And the economic focus was here. The management focus was here. Unfortunately, the acquirer moved them to New York City because the acquirer owns about 50 e-commerce companies and they’ve got them all together in this big building in the Bronx where they can all rub elbows with each other.

>>>

Seed Capital From Angel Investors: Dick Reeves, Executive Director, Huntsville Angel Network (Part 5)

By guest authors Irina Patterson and Candice Arnold

Irina: You were telling me about two companies in your portfolio that failed, and you lost about $1 million combined on both of them. What were the reasons for their failure?

Dick: Both failed for the same reason. They failed for factors that were outside of their ability to control. That’s always the biggest threat. The first company was an energy company trying to do a bio-diesel conversion  and it failed when the price of oil dropped more than 50% in 2008. The second company was marketing private-label prescription pharmaceuticals. They lived in a special little regulatory exemption that the Food and Drug Administration (FDA) had in place for this type of drug. They were a marketing company, essentially. They had a very successful first year, and the FDA changed the rule and forbade what they did. >>>

Seed Capital From Angel Investors: Raymond Chan, Tech Coast Angels (Part 5)

By guest author Irina Patterson

Irina: What do you do when you get incomplete business teams?

Ray: We go in there and help. I especially love to work together with the entrepreneurs. We do what they don’t want to do or what they don’t know that they need to do. >>>

Seed Capital From Angel Investors: Raymond Chan, Tech Coast Angels (Part 4)

By guest author Irina Patterson

Irina: What is a typical valuation of a company when you are investing?

Ray: We don’t touch anything more than $4 million.

Irina: Do you think in terms of equity, and how much equity do you usually seek?

Ray: In terms of equity, it depends. We don’t have the percentage that VCs typically have. We are more entrepreneur friendly than most. It all depends on the negotiation and on how much we like the company, so we don’t have a hot number that we use. >>>

Seed Capital From Angel Investors: Dick Reeves, Executive Director, Huntsville Angel Network (Part 4)

By guest authors Irina Patterson and Candice Arnold

Irina: What do you do for companies that you decide not to invest in?

Dick: We make contacts for them. That’s probably the biggest thing we can do for them – help them understand what they need to do to make them more eligible [for funding] or can help them understand that they’re trying to do something that they ought not to do. I think when you help someone make a good decision about where to go from here, you’ve helped him along the way and done him a favor.

>>>

Seed Capital From Angel Investors: Dick Reeves, Executive Director, Huntsville Angel Network (Part 3)

By guest authors Irina Patterson and Candice Arnold

Irina: At what stage of a business’s development do you prefer to invest?

Dick: Really, anywhere from what I would call pre-seed to developmental. We’ve even invested in one expansion-stage company.

Irina: How about if somebody comes with an idea on paper?

Dick: No. But we have other partners here, like the business incubator, that will work with them. We’ll, in some cases, show them how to find some friends, family, and fools money. >>>