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Seed Capital From Angel Investors: Jeff Clavier, Founder and Managing Partner, SoftTech VC (Part 2)

By guest authors Irina Patterson and Candice Arnold

Irina: How many people work for the fund?

Jeff: It’s just me. I am a workhorse. I have done eighty-two deals in the past six years on my own. And I do support my companies and I do help them and work with my CEOs despite the large number of companies. >>>

Seed Capital From Angel Investors: Alan Rossiter, Vice Chairman, Springboard Capital (Part 10)

Irina: Do you have any sector preference?

Alan: No, but I’ll hit on a couple. First off, one of our criteria – and I call it a soft criterion, but it’s a general guideline that we adhere to – is that within Springboard’s membership, it’s 53 partners, if we don’t have anybody who has expertise in that industry, we generally will not invest in it. I can’t exactly tell you what sectors we invest in but if you tell me a sector, I’ll tell you whether we invest in it. >>>

Seed Capital From Angel Investors: Jeff Clavier, Founder And Managing Partner, SoftTech VC (Part 1)

By guest authors Irina Patterson and Candice Arnold

This is the fourteenth interview in our series on financing for entrepreneurs. I am talking to Palo Alto-based Jeff Clavier, founder and managing partner of SoftTech VC, an early-stage venture capital firm managing a $15 million seed fund, SoftTech VC II.

Irina: Hi, Jeff. Could you tell us briefly about your personal background?

Jeff: I’m French born, raised and educated there. I have a master’s in computer science, with a minor in distributed computing. When I was at school, I did a startup in the financial services market (Effix Systems) that we sold to Reuters Venture Capital in 1993. >>>

Seed Capital From Angel Investors: Alan Rossiter, Vice Chairman, Springboard Capital (Part 9)

By guest authors Irina Patterson and Candice Arnold

Irina: At what stage of a company’s development do you usually invest?

Alan: Post-revenue. To be a little bit more precise, it’s post-revenue but probably before they have a sufficient customer base to interest the venture funds. Venture funds look at companies at various stages but tend, today, to be looking at companies a little bit later than they were five or ten years ago. And that may be three years of revenue, a couple years of revenue. We like companies normally in their first year of revenue. >>>

Seed Capital From Angel Investors: Alan Rossiter, Vice Chairman, Springboard Capital (Part 8)

By guest authors Irina Patterson and Candice Arnold

Alan: In our valuation, we generally ignore almost all the analytical things like discounted cash flows and those types of approaches and simply look at exit – and our expectation of exit is never accurate, of course – to try and figure what kind of internal rate of return we would likely get under given scenarios.

And we want to be in some place that’s in the 20%-plus range of internal rate of return. Looking at it with those metrics known and a pretty solid-looking pro forma, you can come into range of where the valuation ought to be and if it’s there and we like the company, we’re going to invest.

If it turns out it’s a high valuation or a low valuation, we don’t very much care as long as the company is, in our opinion, properly valued. >>>

Seed Capital From Angel Investors: Alan Rossiter, Vice Chairman, Springboard Capital (Part 7)

By guest authors Irina Patterson and Candice Arnold

Irina: What’s the average dollar amount you invest?

Alan: Normally, the average is about $500,000 that we’ll invest initially in every company. It may be a little less, maybe a little above. The largest initial investment we ever made was about $750,000. But it normally hovers around $500,000. When you factor in follow-on capital that may be needed, we may be into companies for over $1 million. Generally, the initial investment will be around $500,000. >>>

Seed Capital From Angel Investors: Alan Rossiter, Vice Chairman, Springboard Capital (Part 6)

By guest authors Irina Patterson and Candice Arnold

Alan: That would be followed closely by the competitive advantage that the company has, particularly if it’s a sustainable competitive advantage, that would allow them to attack the market.

The stage of the company’s development . . . we generally do not look very seriously at pre-revenue companies any longer. We have in years past, but we learned the hard way that that’s not necessarily where we want to invest. So, the stage of the company’s development is certainly a factor. >>>

Seed Capital From Angel Investors: Alan Rossiter, Vice Chairman, Springboard Capital (Part 5)

By guest authors Irina Patterson and Candice Arnold

Alan: Another aspect – and this may be more personal to me than it is to Springboard as an organization – is that one of the other major challenges for angel organizations is communicating with entrepreneurs.

When you see as many deals as we do here – we see about 300 a year – you can spend an entire day, every single day, on the telephone with entrepreneurs and not really get a whole lot done for that day.

On the other side, it’s extremely important to the people who communicate with you and interest you in their opportunities. They deserve our courtesy, our respect, and our responsiveness so it is a constant struggle to be responsive back to the people who apply or who are seeking capital. That is a huge challenge. >>>