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Seed Capital From Angel Investors: Malvern D. Lusky, Individual Angel, Houston Angel Network (Part 4)

By guest authors Irina Patterson and Candice Arnold

Irina: How many companies do you have under your belt that you’ve invested in?

Malvern: I’ve currently got seven.

Irina: That’s a pretty good number for an individual investor. They keep you busy, right?

Malvern: Right.

Irina: What is the typical valuation of a company you invest in?

Malvern: It’s $1 million to $7 million, but again, we sometimes get involved at slightly later stages, in conjunction with a VC, for example. >>>

Seed Capital From Angel Investors: Malvern D. Lusky, Individual Angel, Houston Angel Network (Part 3)

By guest authors Irina Patterson and Candice Arnold

Irina: How long does it take for a company to receive funding from your group?

Malvern: It usually takes from one to three months to get comfortable with the company and complete due diligence.

Irina: And the people are very important, right?

Malvern: Oh, absolutely. The people who are running the company are key to it because if there’s a problem with them, then the company will never make it, never get off the ground. If they’re not experts in their fields, then they need to understand that, and they need to get people who are; they need to be coachable. I’ve run across people before who thought knew everything and wouldn’t listen to anybody or thought they were giving up too much to their company for whatever reason. Those people never get anywhere. >>>

Seed Capital From Angel Investors: Malvern D. Lusky, Individual Angel, Houston Angel Network (Part 2)

By guest authors Irina Patterson and Candice Arnold

Irina: Approximately how many deals have you invested in so far?

Malvern: The total, including the ones I’ve exited, would probably be about 12, maybe more. But that includes deals that I’ve already exited for one reason or another . . . or they didn’t work.

Irina: Is this something that you enjoy doing?

Malvern: I very much enjoy doing this. I love it. >>>

Seed Capital From Angel Investors: Malvern D. Lusky, Individual Angel, Houston Angel Network (Part 1)

By guest authors Irina Patterson and Candice Arnold

This is the fourth interview in our series on seed financing and angel investing. Today we are talking to Malvern D. Lusky, CPA, and individual angel who is also a part of the Houston Angel Network.

Irina: Hi, Malvern. You’re an individual angel, right? And also associated with the Houston Angel Network (HAN)?

Malvern: That’s correct. I did a little bit on my own before joining the network, and I’ve been a member of that network for five years now.

The Houston Angel Network is a nonprofit organization that provides its members a forum in which to efficiently evaluate promising early-stage investment opportunities. Its membership consists of active and SEC-accredited angel investors who share the goal of making informed, collaborative investments in promising early stage Texas-based companies. HAN was founded in late 2001 and is the largest and most active angel network in Texas. Since inception, our members have invested more than $27 million in 54 deals. >>>

Seed Capital From Angel Investors: Paul Olliver, Wider Wake Networks (Part 8)

By guest authors Irina Patterson and Candice Arnold

Irina: So, what do you think is the most important thing that angel-backed founders should do to increase their chances of success?

Paul: From our perspective, if Wider Wake, being an angel group, has backed a team of founders, the best thing they can do is engage with those angels. Make sure that if you have angels or if you’re bringing angel money in, make surE it’s strategic money. I understand that some companies don’t have the choice, but where you do have strategic angels, make the most of them. I think you’d be surprised. >>>

Seed Capital From Angel Investors: Paul Olliver, Wider Wake Networks (Part 7)

By guest authors Irina Patterson and Candice Arnold

Irina: Any interesting stories about the companies you invested in?

Paul: Back to appssavvy, they’re really a case study deal for us. That’s exactly the way in which we like to work.

Steve: appssavvy started out with an idea when Facebook opened its platform to third-party developers. So, if you are familiar with Facebook, you may see apps like “Mafia Wars” or “Circle of Moms” or “Farmville.” All of these are applications that are built on the Facebook platform, to engage and entertain Facebook users. There are upward of 300,000 different apps on the Facebook platform today. >>>

Seed Capital From Angel Investors: Paul Olliver, Wider Wake Networks (Part 6)

By guest authors Irina Patterson and Candice Arnold

Irina: Do you invest in teams straight out of school, or do you require previous business experience? If only with experience, what level of experience do you require?

Paul: We much prefer teams with experience, but that experience doesn’t need to be at a certain level of office. >>>

Seed Capital From Angel Investors: Paul Olliver, Wider Wake Networks (Part 5)

By guest authors Irina Patterson and Candice Arnold

Irina: Is there anything your group does differently from others in valuing a company?

Paul: As we’re all successful entrepreneurs ourselves, we’ve been on that side of the table. We understand motivation and what a poor capitalization structure can do to motivation. For example, just because an entrepreneur wants to get a deal done and is offering a majority share to do so, that may not be the best course of action and may create flight risks and other issues once future rounds and dilution are taken into account. That said, we’re no pushovers, but it’s a balance between motivation on the strategic investor side and that of the management team itself. Both have ownership hurdles that need to be protected. >>>