In a display of impressive collaboration, the seven most active angel investor networks in Southern California held a joint summit yesterday to at the USC Marshall School of Business.
The networks present were Maverick Angels, Tech Coast Angels, Pasadena Angels, Golden Seeds, HBS Angel Network, Private Capital Network, and Arch Angels. The event, which was attended by more than 150 investors with a reported average investable net worth of $5 million, focused on the pitches of three promising local companies. (Hundreds of other non-attending members also received copies of all presented information.)
The companies, Emerald Logic, Makucell, and Roozt, were the winners of a month-long selection process.Each of the seven angel networks fielded pitches to identify a single representative company. These seven companies then presented to the presidents of networks, who narrowed it down to the three finalists.
The finalists could not have been more different.
Emerald Logic is a big data analytics company using something called “evolutionary computing” to parse enormous data-sets with large numbers of interrelated variables. The company currently applies its solution to healthcare and financial problem sets and typically earns a revenue or profit share from its clients based on performance.
Makucell is a life science company that makes medicinal cosmetics to address aging in skin, hair, and nails. The company has a full product line marketed under the name Renewnt, which it is currently introducing to the market in both non-prescription and prescription applications.
Roozt, the launch of which we covered at PandoDaily, is a cause-based ecommerce marketplace that offers socially conscious brands a platform to reach a growing lifestyle fashion audience. The company’s platform went live at the end of March and currently supports 80 brands and 75,000 consumer subscribers.
Following a 15 minute pitch from each company, and a brief Q&A session, the group broke out into three individual due diligence sessions, during which interested investors could learn more about their favorite company. The three sessions were equally well attended, and the questions asked were surprisingly good.
This was especially true considering a statment I overheard during a networking event afterward. A grey haired gentleman in a lovely blue blazer with gold buttons said, “I don’t accept invitations on LinkedIn. I’m not on that Facebook either. I don’t get the point of sharing every little detail of my life with the world.”
He may not be the ideal investor for a consumer Internet company, but that says nothing of his expertise in healthcare or engineering for example. This is the power of events like these.
These angel networks provide a critical service to the entrepreneurial community. By institutionalizing their investment activity, the groups are able to crowdsource deal sourcing, domain expertise, and funding, theoretically enabling more and higher quality deals to be completed. Additionally, by formalizing their investment process, the groups have in many ways simplified these transactions for the startups. The Tech Coast Angels and Pasadena Angels were recognized for adopting a standard two page term sheet for example.
There was no official winner, other than the local startup ecosystem. Based on conversations I overheard, each of the companies is likely to get a portion or all of the requested financing. The feedback around the room was extremely positive, and everyone involved suggested that this event will be the first of many.
[Illustration by Hallie Bateman]