Yesterday I was invited to attend the monthly meeting at Golden Seeds. Golden Seeds is an angel investor group that provides early stage financing to women entrepreneurs or companies where women have a large piece of the equity.
Just as there are groups that pool their money to invest in stocks, there are a variety of angel groups across the country. I am sure the angel concept is probably similar in other groups except here the mission is slanted towards the women-centric companies. The categories are bio-tech, software, media, hardware and consumer companies.
Companies present to the group. The group is the investors mostly made up of women although there are some men. Each member/investor pays an annual fee of $2500 and are expected to make a minimum of $50K in investments over an 18-24 month period in increments of $25K. This is just an expectation.
Once the companies present, and there were four yesterday, the investors ask questions. Once the company exits, the investors show if there is any interest in the company. If there is more than 8 people, the process then begins. The first part of the process is due diligence. This is made up of Golden Seeds members that are interested in making an investment in that particular company. This group really drills down on the people involved, the product, etc., and then negotiates a term sheet. At this point, the members involved say how much they are willing to invest towards this particular deal and the money is pooled and the investment is made under Golden Seeds. One of the people of that pool generally takes a board seat to represent the group and become actively involved in giving advice, mentoring, introducing partners, etc. for the company.
The four companies that presented yesterday ran the gamut. One was a personalized dose management program that helps a patient take an accurate measurement of their blood. This company was working on their series C round. That is a third round of financing. The company has had a proven track record and continues to grow and had fantastic margins. The other company was a data aggregation tool for farmers that distribute sustainable food to their end consumer, be it a restaurant or a grocery store. The third had created the ability for radio/tv talk show hosts to interact and communicate live to their audience. The last was a company whose technology, mathematically, understood how to uncover the meaning of brands online. A cloud technology.
As I am pretty familiar with the process and have done my own angel investing, I found the process yesterday of interest. There is something nice about having a group of interesting investors looking at companies together that all have different backgrounds and thoughts. What I found is that the questions were really geared towards analytical data vs the leap of faith. Is this company actually creating something that has potential down the line and fills a void. Does it have the ability to scale? Are the people behind it capable of making that happen? What does your gut tell you? Maybe that is talked about more during the due diligence process, I don't know. I found most of their questions geared towards a Series C round than a first time angel investment. Again, that was just a few hours of watching not the secondary part of the strategy before making the actual investment.
I was delighted to be invited and listen to the companies. Some worked for me while others didn't. Also, although even though one of them I thought was a great investment, the actual product did nothing for me. I want to invest in companies that spark my interest regardless of just being a good investment. I also love working directly with the entrepreneur and hopefully helping them see their vision become a successful reality.
Not sure Golden Seeds is for me, but I did find the mission, the process and investors in the room interesting.
great post and great points.i think investing in what you are passionate about and taking leaps of faith are the only ways to really excel at angel investing.
Advice from an expert in the comment belowJudy
Thank you for your very clear assessment. It was suggested to me to present my business model to Golden Seeds for Angel Investing. My company is Orange HOWELL – Made in the USA silver gift products. Three phase solid and technological model to present should you know of a special Angel!”Orange HOWELL Luminous gifts of quality American craftsmanship”