Jul 14 2007
Pasadena Angels Investors
By Al Schneider (Vice Charmain, Pasadena Angels) and Joe Platnick (Director, Pasadena Angels)
The Pasadena Angels is a group of over 100 accredited entrepreneurial investors who provide early-stage financing and counsel to emerging companies located in Southern California. Pasadena Angels actively support funded companies with the human and financial resources to enhance their success, and typically serve as advisers and/or directors after funding. The Pasadena Angels invest in early-stage pre-revenue and low revenue companies in a broad range of industries, including but not limited to technology-based companies, that have the potential to build successful businesses based on sustainable competitive advantages in their markets.
Pasadena Angels typically provide $250,000 to $750,000 for early-stage companies and often co-ordinate with other angel investment groups and venture capital firms to support companies that are raising up to $3 million or more. The Pasadena Angels charges no fees for its services and makes an effort to offer constructive feedback even to those companies which it does not fund. In the first seven years since its founding in 2000, Pasadena Angels investors have funded over $15 million into 45 companies.
Investment Criteria
The Pasadena Angels works with companies that typically have most if not all of the following characteristics:
- Large market opportunity with sufficient untapped potential
- Product proof-of-concept with manageable development risk (if pre-revenue)
- Scalable business with prospects for rapid growth
- Compelling and defensible market differentiation with identifiable customers
- Well defined sales/marketing strategy with strong understanding of competitive landscape
- Compelling business model and financing plan that leads to profitability, positive cash flow, and reasonable returns for an investor
- Intellectual Property - proprietary and defensible processes or applications
Review of Opportunities and the Investment Process
Companies are invited to post brief descriptions of their business plans and funding needs online at www.pasadenaangels.com. Neither a detailed narrative business plan nor a PPM is necessary to begin, or indeed complete, the review and investment process. Companies who submit information by the end of the first week of the month are typically pre-screened before the monthly meeting on the second to last Wednesday, at which time four to six invitees to a screening session on the last Wednesday of the month are selected. In many cases, companies are held over for possible screening in a future month if they are “on the bubble” or if additional information is required.
Screening sessions are usually attended by a dozen or more members who collectively make a decision whether to invite the company to the next monthly breakfast meeting, on the first Wednesday of the month; to continue to work with the company to explore open issues or sharpen the presentation of the opportunity; or to terminate consideration of an investment at that time and give some guidance about how the company could best move forward toward its goals.
Assuming a company is selected to present to a Pasadena Angels breakfast meeting, which typically would have 65-80 members and guests in attendance, an even closer relationship is established. Often counsel will be given after the screening to help improve the breakfast presentation. If there are a reasonable number of investors interested in the company after the breakfast presentation, then a 2-hour due diligence meeting with the company management team and the interested investors is scheduled for the second Wednesday of the month. Based on that meeting (and follow up meetings with the lead investors and those actively involved in the due diligence process), if there is continuing interest on both sides a term sheet is negotiated and counsel retained to prepare closing documents. It is important to remember that Pasadena Angels never invests as a group; it is its members who, in a co-operative way, work with company management to explore whether an investment makes sense.
Whatever the immediate funding outcome, the commentary and advice provided by the angels has been repeatedly identified by companies as highly invaluable, often resulting in modifications to marketing or financing plans that contribute to the company’s ultimate financing and business success. Indeed, often companies re-apply, months or even years later when they have made additional progress.
