angelinvesting

If you're thinking about going the angel route, here are five critical things to know about the process that can lead to a successful round.

For startups, a great alternative to venture capital is angel funding. A silver lining that has rapidly emerged over the past year is the uptick of virtual angel investment groups. 

At Keiretsu Forum we have pivoted online, a notable trend amid large angel investment groups, which means existing investors, no matter their location, can access and evaluate any of the deals that go through the network. Concurrently, new investors seeking to diversify their portfolios are gravitating to the virtual angel model. Member onboarding, due diligence, live presentations, and member meetings are now all conducted online.

If you’re thinking about going the angel route, here are five critical things to know about the process that can help lead to a successful round:

1. Prepare for virtual fundraising

In a post-Covid-19 pandemic, world capital must be raised virtually. The biggest challenge for entrepreneurs is that investments are made without ever meeting potential investors face-to-face. There is minimal eye contact and little body language—which is the language of funding—in a Zoom meeting. The goal is selling the upside potential and creating interest.

Try and get into the mind of the angel, who will be evaluating you and asking themselves:

• Who are you?
• Why would I want to be involved and work with you?
• Do I support the journey, the mission, and the impact?
• Is the technology compelling?
• How vast is the market opportunity?

All those questions must be addressed during the pitch presentation.

Fundraising as an ongoing process, with presentation and speaking skills evolving over the course of the campaign. Constantly evaluate your own presentation: Is the audience-market quickly defined? What is the pitch about? Why is it being pitched? Who will benefit from it?

Indeed, the most effective technique for improving your pitch skills is to watch entrepreneurs with similar stage companies deliver pitches. Presenting to 50, 60, or hundreds of investors is no small task. Before and during the process, put your ego aside, and attend a few online investor forums to see how the best do it.

A good pitch coach is someone who can simplify the process and make it less daunting. In addition to the pitch itself, not to be underestimated is honing the presentation skills that enable the entrepreneur to deliver an engaging and compelling presentation.

2. Angels like familiarity

Angels gravitate toward opportunities in the industries they have direct experience in, and the insights they can share with founders on how to successfully grow companies within those markets is invaluable.

Relationships between entrepreneurs and angels can get started quickly and can be very hands-on, with angels oftentimes embedded within the company’s extended management and advisory network. In scenarios like this, the expertise, plans, and funding take place within an exciting and collaborative environment.

“People invest in people they know, like and trust. Once an entrepreneur goes through the process of securing angel funding, they are part of a tight community.”

People invest in people they know, like, and trust. Once an entrepreneur goes through the process of securing angel funding, they are part of a tight community. By example, approximately half the entrepreneurs that present to Keiretsu Forum are members of the group. Many are angels and entrepreneurs that have built and sold several companies.

The companies that make it through the full process are typically ones who raise capital, have a track record of success, understand the fundraising process and the value of seed funding. This environment helps to cultivate relationships between the investors and the entrepreneurs.

3. Due diligence is the force multiplier

Due diligence is the key to a successful funding round. The process can be lengthy, taking upwards of 80 to 100 hours over six to eight weeks, but once completed the company is now able to syndicate and receive further capital.

Typically, in an angel group setting, companies initially pitch first to a deal screening committee who determines if the opportunity is worthy of a full investor presentation. If there is interest, the due diligence process begins. Keiretsu Forum deploys on average 50 to 60 members that evaluate the opportunities and vote on inviting opportunities forward to the next step. Tight screening should be a confidence builder for both angel and entrepreneur.

For example, Keiretsu Forum members back more than 80% of the companies that go through the process. An affiliated fund, Keiretsu Capital, will often invest alongside the members backing the company. This process gets repeated when the deal is syndicated across the network that includes numerous additional angel groups. At the end of the cycle, there should be 50-70 interested angels to close capital from.

4. Protect intellectual property

Most angel investment groups will not sign NDAs to conduct due diligence. It is critical to have a proper patent strategy to protect key intellectual property (IP). That said, due diligence plays a large hand in formulating that strategy, ensuring there is a good framework in place for the company to document a sustainable differentiation, with the freedom to operate and prevent competition from infringing on their patents.

Most angel groups have IP attorneys who are members and conduct those reviews. Be careful about what you put in writing—angels should be able to understand what is going on with your business without you disclosing important assets.

5. Family offices deliver patient backing

The alignment between family offices and angel groups is the future of entrepreneurial finance. Indeed, family offices are experiencing a huge transfer of wealth (approximately $20 trillion) to the next generation of family members who are eager to make impact and diversity investments. Consider that more than one-half of the companies funded through Keiretsu Capital are now also funded by family offices.

Moreover, unlike VCs, family offices are geared toward investing over a longer horizon and do not have an incentive to overly dilute the companies they invest in. Most important, family office investment adds a substantial balance sheet for fueling growth, and a sense of financial confidence for anticipated tough stretches.

The symbiotic relationship between the angel investors that have the entrepreneurial expertise and the family offices that have the wealth that should most excite female entrepreneurs seeking to raise capital.

Brianna McDonald is president of Keiretsu Forum Northwest, the largest chapter of Keiretsu Forum, the world’s biggest angel investor network ranked by Pitchbook #1 “Most active investors early stage US region” and “Most active investors late-stage US region.” Brianna is adept at screening companies for angel investment, coaching companies on presentation and investor relations, sales strategy execution, relationship management, and leading due diligence teams. Brianna believes in companies that have “multiple bottom lines”, in that they are not solely focused on profits but also focused on impact, social good, diversity, and making the world a better place for the next generation. 

Want to invest directly with an entrepreneur, and get in on the ground floor of a great idea? Angel investing is the way to do it.

Over the last few months, we heard a specific question from many of you — “How do I become an angel investor?” So, we decided to do a show on that very topic! 

If you haven’t heard the term before, an angel investor is someone who provides funding for small startups or entrepreneurs. The funding can be any amount, really, and sometimes the angels will get an ownership stake in the company for their investment, while other times there will be an agreement drawn up for getting your money back — plus profits — once the company gets off the ground. You may sometimes hear angel investors referred to as “private investors,” “seed investors,” or “angel funders,” but one thing is clear — no matter what you call them, angels can make a huge difference in the life of an entrepreneur, and they can also make some serious money in the process. 

This week we’re sitting down to talk about all of it with Brianna McDonald, President of Global Investment Network Keiretsu Forum, which has invested $750 million in over 1,000 companies since it was founded in 2000.

Listen in as  Brianna McDonald gives us all a crash course in what angel investing really is, and breaks down how angel investing differs from crowdfunding and venture capital. We also explain what it means to be an “accredited investor” and all the different pathways to becoming an angel investor. While angel investors previously had to prove that they earned $250,000 per year in order to become an accredited angel investor, these days that’s no longer a requirement — as long as you can prove that you have investing skills or pertinent subject matter expertise, you’re in. 

Brianna talks about how angel investors can find successful rates of return, and why now is a great time for women to consider becoming angel investors. Brianna also walks us through how she got started investing, how to find angel investing groups around the country and the importance of doing your research. 

“The first thing that is really important to figure out is your investment thesis. What do you want to put your dollars towards?” Brianna says. “So, aside from supporting these entrepreneurs, for me, what gets me up every day, especially as a mom of three young kids, is I’m helping to advance technology to make the world a better place, and that’s exciting.” 

Hear the Podcast organized by Her Money

Brianna walks us through the steps involved in becoming an angel investor, from conception to completion, and talks about some of the unknowns in angel investing that typically trip people up. She says there’s a reason why she recommends sitting in and observing the angel investing process and participating in “incubator” style environments for at least six months to a year before making your first investment. To determine whether an investment in a company will pay off, you should make sure to inquire about their capitalization plan, and how much they need to raise so they can go the distance. You should also seek to speak with the CEO and see how the communication flows — when you stop hearing from a company, that’s usually a sign that things have gone wrong. 

In Mailbag, Jean and Kathryn talk about saving for the down payment on a home for a child, how to rebuild credit after a couple of delinquent payment mistakes, and what to do in advance of a credit card losing its introductory 0% interest benefits. Lastly, in Thrive, where to find the best deals at Costco. 

Sep 29, 2020, 10:31am, Forbes

Today, HaptX, Virginia Tech, and the University of Florida won a $1.5 million National Science Foundation (NSF) grant to develop the first program to bring force feedback to upper and lower limbs in virtual environments, ForceBot. Founded in 2012 by Jake Rubin and Dr. Robert Crockett, HaptX started with a vision they strikingly captured in an image of the full body haptic system Rubin envisioned for virtual reality (VR). The company has taken a serious detour through reality, productizing haptic gloves for VR and robotic telepresence. After turning practical, and doing another round of funding based on its growing enterprise business, they are going back to the future with this announcement.

ForceBot is a four-year project to develop an exoskeleton for commercial and enterprise applications using HaptX’s microfluidic touch feedback technology to simulate virtual objects. The NSF grant will be distributed between each company to contribute individual components to ForceBot, and then the resulting IP will be used for commercial products. In the project, VR and robotics are hand in hand towards building a full-body haptic exoskeleton rig. The rig will increase force feedback on the human body for users in virtual environments. HaptX’s contribution to the project is finding the commercial uses for the rigs, in addition to the use of HaptX Gloves products in the rig. Jake Rubin, CEO and Founder of HaptX told us that in the short term they have always, “built towards the company’s original vision piece by piece, performing R&D on each segment of the full system while simultaneously narrowing down what has the most short term commercial potential.” The grant brings things into a full circle, with plans to use the exoskeleton to create prototypes of a product for the future.

This exoskeleton will be designed to mimic real-world forces such as weight, texture of objects, shape, and terrain. Dr. Alexander Leonessa, Principal Investigator, Virginia Tech stated, “we’re excited to create a system that increases immersion for VR users in applications requiring intensive body motions like sports and industrial skills training, gaming, emergency response, and many others.” 

How we interact with the virtual worlds we occupy is one of the central questions of VR. This thought regarding HaptX was included in my first book, Charlie Fink’s Metaverse. With the HaptX full exoskeleton, the rig will be able to use mechanical arms with gloves [as seen at CES 2020] and actuators attached to each leg will simulate the haptic feedback from walking, running, and climbing stairs. The company is trying to establish itself as more than a glove company. Regardless of the success of the ForceBot, the worst-case scenario is still a product that fulfills the company’s original vision in some capacity. Rubin left us with this statement, “immersion and fidelity are wanted in the market and HaptX is not going to stop until we get there.” 

This story was written with Brandon Cloobeck.

About Keiretsu Forum

Keiretsu Forum, the world’s leading angel investor network with over 1,500 investors in 38 chapters on 3 continents. Keiretsu Forum has invested more than $500 million into more than 700 companies since inception. Keiretsu Capital administers funds on behalf of its Limited Partners - the Co-Investment & Opportunities Fund creates a diversified portfolio of technology start-ups backed by top tier angel groups and pursues the high upside value potential in these dynamic investment opportunities while promoting the sharing of risk inherent in any early-stage venture.  The firm is based in Seattle and San Francisco and its principals are veteran Silicon Valley and technology investors Randy Williams, Matthew C. Le Merle, and Nathan McDonald. 

For more information please visit www.keiretsuforum.com or contact us.

Aclipse Therapeutics is pleased to announce that one of the world’s largest biomedical research funding agencies has awarded Aclipse a $2.1 million grant to support the development of Aclipse’s M102 for the treatment of ALS. The grant is non-dilutive and will fund the completion of IND-enabling studies and will allow Aclipse to initiate the first-in-human studies for M102. The grant will also further fund the development of therapeutic biomarkers for M102’s efficacy and patient stratification. The grant award was the result of a highly competitive application and peer-review scientific process. 

This most recent grant makes a total of over $2.8 million non-dilutive funds awarded to the M102 program in the last month and further validates M102’s biological approach and potential to become a targeted and life-saving therapeutics for ALS patients. 

Raymond K. Houck, CEO of Aclipse Therapeutics, said: “We are honored by the support from FightMND which shares our vision for a novel and broad multi-disease pathomechanism approach to treating ALS patients.

 “The FightMND award also confirms M102’s success to date and validates M102’s potential to become a targeted and life-saving therapeutic for ALS patients.”

The research forms part of the work of the University of Sheffield’s Neuroscience Institute, which aims to bring academics and scientists together from across varied specialties to translate scientific discoveries from the lab into pioneering treatments that will benefit patients living with neurodegenerative disorders.

The study was supported by the National Institute for Health Research (NIHR) Sheffield Biomedical Research Centre, which is the UK’s only Biomedical Research Centre dedicated to Neurology. It is a research partnership between the University of Sheffield and Sheffield Teaching Hospitals NHS Foundation Trust, dedicated to improving the treatment and care of people living with chronic neurological disorders.

Read the article to know more.

 Keiretsu Capital identified and invested in Aclipse Therapeutics, an innovative biopharmaceutical company that focuses on developing novel and highly differentiated drugs to address diseases with high unmet medical needs. We are confident in this company and team; they continue to meet their milestones and deliver on targets.” said Nathan McDonald, Managing Partner and CEO of Keiretsu Capital.  

About Keiretsu Forum

Keiretsu Forum, the world’s leading angel investor network with over 1,500 investors in 38 chapters on 3 continents. Keiretsu Forum has invested more than $500 million into more than 700 companies since inception. Keiretsu Capital administers funds on behalf of its Limited Partners - the Co-Investment & Opportunities Fund creates a diversified portfolio of technology start-ups backed by top tier angel groups and pursues the high upside value potential in these dynamic investment opportunities while promoting the sharing of risk inherent in any early-stage venture.  The firm is based in Seattle and San Francisco and its principals are veteran Silicon Valley and technology investors Randy Williams, Matthew C. Le Merle, and Nathan McDonald. 

For more information please visit www.keiretsuforum.com or contact us.

About  Aclipse Therapeutics 

• Aclipse has an experienced management team that exited Thar Pharmaceuticals, where we developed a phase 3 orphan drug that was acquired by Grünenthal.
• They have an ALS clinical advisory board of 5 of the top 10 ALS physicians in the world.
• Their first product M102 is a disease-modifying, new chemical entity drug candidate for Amyotrophic Lateral Sclerosis (ALS, Lou Gehrig’s disease) with a significant upside to also treat in Huntington's disease, Friedreich’s ataxia, and Parkinson's disease.
• M102 activates the Nrf2 and HSF1 pathways and, in animal models, not only stops ALS disease progression, but reverses the animals back toward the healthy state.
• They can identify those ALS patients who respond to M102 vs. those patients who do not respond. This ability to precisely target specific patients increases our probability of clinical success by 3.1-fold according to industry data
• The US spends $6 billion per year on treating ALS patients. M102 is projected to generate $2.3 billion/year in peak sales.

Learn more - https://www.aclipsetherapeutics.com/

By Tony Lystra  – Tech Editor, Puget Sound Business Journal

Aug 27, 2020, 11:57am EDT

Earlier this year, Joule Case, the Seattle portable battery manufacturer, thought it had found a stable, reliable market in music festivals. 

Last year, the company powered nearly a half-dozen music events, including the Treefort Music Fest in Boise and the Nocturnal Wonderland rave festival, which hosts events in Southern California and Texas.

Historically, the festivals have relied on diesel generators, coughing out plenty of carbon emissions as they power lights, video displays, soundboards, amps, and monitors.

Joule Case has a solution for that: modular, stackable, and scalable battery configurations that supply all the power diesel generators produce and then some without the greenhouse gases. 

Until the pandemic hit, the music festival season had been scheduled to begin in March, and Joule Case was lined up to power more than 100 of them.

“If you were to tell me in January that there would be an international pandemic and all the customers and all the music festivals lined up would be zero — a big giant goose egg for music festivals — I would have said, ‘Well, Joule Case is not around anymore,’” said James Wagoner, the company’s co-founder, and CEO. 

Rather than quitting, Wagoner and his partner, Alex Livingston pivoted the company toward new markets. Since Joule Case’s beginning in 2015, the partners had been discussing what they see as their batteries’ potentially endless uses.

“The vision of Joule Case is to be, as we call it, the Standard Oil of the green revolution,” Wagoner said. 

That means the batteries can be used to store solar power, provide backup energy to homes in case the grid goes down, and for camping trips, food trucks, medical devices, and building contractors.

“We had some of these conversations back in the day. We had to restart those conversations,” Wagoner said. “It’s just finding those different sales channels and resellers, telling a different story.”

Since the Covid-19 pandemic gripped the U.S. economy, Joule’s investors have been channeling sales opportunities from those new markets to the company, which, Wagoner said, has had to do hardly any cold sales or marketing during the pandemic.

Last week, Joule closed an oversubscribed, second-round convertible note offering, raising $500,000. In all, Wagoner said, the company has raised $1.5 million, largely from angel investors, including Park City Angels and Keiretsu Forum, the international community of private equity angel investors, venture capitalists, and corporate and institutional investors.

Had COVID not killed this year’s music festival season, “Joule Case would have been a much larger company than it is right now,” Wagoner said. Joule had to lay off four music industry specialists because of the pandemic. 

Thanks to those new sales channels, he said, Joule now employs five people and is hiring to fill another two positions.

Since last year, the company has sold more than 200,000 batteries, which are assembled in the Boise, Idaho, suburb of Garden City. A single food truck spent $20,000 on Joule batteries to replace its diesel generator, Wagoner said.

The batteries, he said, come in various sizes and configurations and can be assembled like Lego blocks to suit a customer’s power needs. Costs typically range from $700 to $80,000. A single $700 Joule battery can power a TV for eight hours.

The company is currently talking with electric vehicle manufacturers about using the batteries in cars and trucks. In fact, Wagoner and Livingston’s previous company, R2EV, built batteries for use in electric vehicles.

Among the markets that have emerged from the Covid outbreak are video conference funerals, where portable power is needed to power cameras and TV monitors.

One hospital in California is using a Joule battery to power a portable video conferencing system that can be wheeled into quarantined patients’ rooms so they can talk with their family members.

And then, Wagoner said, there are coders and executives from Google and other Silicon Valley tech companies, who are working from home and facing an unstable California power grid.

“We are seeing significant demand for our power,” Wagoner said. “It’s sometimes good to not know what the future is so you’re not overwhelmed by it.”

About Keiretsu Forum

Keiretsu Forum, the world’s leading angel investor network with over 1,500 investors in 38 chapters on 3 continents. Keiretsu Forum has invested more than $500 million into more than 700 companies since inception. Keiretsu Capital administers funds on behalf of its Limited Partners - the Co-Investment & Opportunities Fund creates a diversified portfolio of technology start-ups backed by top tier angel groups and pursues the high upside value potential in these dynamic investment opportunities while promoting the sharing of risk inherent in any early-stage venture.  The firm is based in Seattle and San Francisco and its principals are veteran Silicon Valley and technology investors Randy Williams, Matthew C. Le Merle, and Nathan McDonald. 

For more information please visit www.keiretsuforum.com or  contact us.

About Joule Case

Joule Case is the only power solution that works for consumers and commercial, industrial, and special event applications.

Know more - https://joulecase.com/

425 business, August 10, 2020: Interview with  Brianna McDonald on how to successfully raise funding during COVID.

Despite a worldwide pandemic, entrepreneurs and investors continue the quest to uncover emerging-market drivers and opportunities. At Keiretsu Forum, we have funded nearly all of the companies this year that have participated in our (now virtual) online investment forum, with a continuous flow of due-diligence packages completed or syndicated new deals successfully closed. 

We strongly believe there will be a V-shaped recovery for 85 percent of the economy; already there are favorable market indicators such as a stabilized and appreciating stock market. Available capital and liquidity also remain abundant. Companies that have significant demand drivers associated with COVID-19 are raising capital fairly quickly and efficiently in large amounts. Technology also remains an area of continued interest with a high quality of deal flow.

A silver lining is we expect to see leaner, more efficient, and more focused companies moving forward, ready to take advantage of a market recovery. If you’re considering funding or in the process now, here are seven steps early-stage companies can take to become more attractive to investors.

1. Strengthen the balance sheet by closing outstanding commitments, and explore venture debt and lines of credit.

Companies should exhaust every opportunity to generate additional working cash flow without taking on additional liabilities. One way is to convert lines of credit or venture debt into expanded cash flow. Likewise, companies with inventory will want to increase stock, even though there might be volatility in inventory drawdowns and/or potential supply chain challenges. To do such, close any existing sales or partnerships because they can provide additional flexibility and cash where applicable. For example, Palarum offers a product for hospitals that prevent falls and just completed key pilot studies. It recently concluded a three-year purchase letter of intent from a key customer, which is leveraged to acquire additional financing that covered the cost of the product rollout.

2. Negotiate with vendors/landlords/others to reduce or defer costs.

On average, our portfolio companies are negotiating reduced rates cut at nearly 50 percent. If no reduction is available, look to get two or three free months deferred to the end of the lease. You might be surprised at how easy it can be to negotiate favorable terms. Replacing a tenant is a high-cost landlord who wants to avoid for otherwise high-quality growing companies.

3. Immediately variabilize costs/shift to equity-based compensation where it makes sense.

A great way to reduce cash burn is to increase option pools and/or create more equity-based incentive compensation in the form of stock options available to executive team members. Less cash-out equals less cash burned! Equity-based compensation is tied to milestones and is considered a variable cost.

4. Slow down payables, including maximizing payment schedules against terms and conditions.

This is another case of “Ask and Ye Shall Receive.” Negotiate longer payment terms, and/or purchase upfront or in bulk. That can drive substantial price reductions and savings of as much as 50 percent.

5. Take swift action to cut costs and reduce burn rates — earlier decisions are rarely regretted.

Where are you focusing your marketing spend? Where are you focusing on your business development efforts? Is that spend really realistic going forward? Is engineering fully focused on where it should be? If not, cut back as much of that discretionary spending to further reduce the burn rate. Look at ways you can be a more efficient customer-focused organization versus a market-focused one.

6. Focus on revenue generation, reorder priorities, replan the road map to emphasize the top line.

Maximize the top line and get healthy around that line of business. Start by replanning the go-to-market road map, with a focus on the core values and core customers that maximize survival. Oftentimes companies try to do lots of different things, but in reality, there are only one or two things they do really well. Everything else is a distraction that drives excess costs. Focus on the customers who have money and will have significant demand for your product or service. Then make sure to take really good care of them!

7. Get in line now for government support/non-dilutive funding (e.g. DoD, NIH grants), etc.

Most companies have probably filed for PPP funding; if not, do so immediately, but there are other opportunities for government funding. Many of our life sciences and health care technology portfolio companies, such as XYZ, have applied for DoD and NIH grants administered via the Small Business Innovation Research and Small Business Technology Transfer (STTR) programs.

Brianna McDonald is president of the Northwest region of the Keiretsu Forum angel investment community.