Q&A talks about angel investing with Mike Roer, president of Entrepreneurship Foundation Inc.
Q: Fairfield University’s School of Engineering and the Inventors Association of Connecticut (IACT) had an event featuring angel investors and entrepreneurs entitled, “Prospecting for Funding in 2013.” What was the goal of the program?
A: The purpose was to acquaint innovators with new sources of public and private support, both monetary and technical.
Q: How is the market for angel investors? Are they targeting specific areas for investing over others?
A: The number of angel investors is expanding. Additionally, the primary angel investing group in Connecticut, the Angel Investor Forum, is launching an early stage fund of its own. This will provide applicants a faster turnaround since the investment funds will already have been committed and in the bank. (Contact AIF president John Seiffer at john@BetterCEO.com for more information on this early stage fund.)
Q: One of the goals of the program was to explain the process. Granted, books have been written about this, but what is the first step inventors need to take to begin searching for angel investors?
A: Probably not to buy a book, but attend orientation sessions like the one produced by IACT. It’s difficult to find individual angels — they don’t have web sites, like venture capitalists — so I recommend contacting an angel investor club. Three active groups in the region include: the Angel Investor Forum, already mentioned, at www.AngelInvestorForum.com; New York Angels at newyorkangels.com; and River Valley Investors, in Springfield, Mass. at http://rivervalleyinvestors.squarespace.com/. The clubs typically will ask an entrepreneur to email an executive summary or complete an online application.
Q: What are some of the mistakes made in this process? Where do inventors go wrong when searching out angel investors?
A: Not having an act together. It would be a waste of time to apply without at least a summary business plan. Readers can download a free text on business planning at http://entrepreneurshipfoundation.org/resources.html
The 91-page PDF outlines issues such as:
• Assessing entrepreneurial aptitude;
• Identifying sources of capital;
• Selecting a legal structure;
• Preparing the business plan;
• Presenting the plan to capital providers.
The document gives strong advice on the basics of a business plan, including the purpose, the outline of a business plan and where to begin.
Writers on it include myself, as well as Benoit N. Boyer, chair of the accounting department at Sacred Heart University; Ken Kollmeyer, small business development specialist with the Connecticut Small Business Development Center; and Matthew Smith, Connecticut Innovations. In addition, I was a co-editor along with David Sturgess, partner, Updike Kelly & Spellacy, Attorneys.
Q: Lets look at this from the perspective of an angel investor. Why do it? What’s the return? Are your odds better at playing the lottery?
A: The odds are slightly better than the lottery, and it is much more rewarding, as monies are invested in building the economy and creating jobs. It is also very personal. Angels back up their financial commitment with advice and counsel. Secondly, while angel investing is highly speculative, the alternative, more conservative investments (e.g. CDs paying 1 percent) do not have as high a rate of return.
Q: You’re president of the Entrepreneurship Foundation. What does your group do? What are some of its goals?
A: The Entrepreneurship Foundation is a 501(c)3 institution dedicated to expanding the economy and creating jobs by fostering startups. We work with the colleges and universities in the state to continually improve the quantity and quality of entrepreneurship offerings, administer the statewide business plan competitions, and support experimental programs to facilitate the implementation of promising business concepts.
