Week 2 ENT 650: Angel Funding & the Pitch Session

I wish you could call me young and naive, but, in this case, I was just naive. Before I started this entrepreneurship program, I thought an angel investor was exactly like it sounds. A person who has extra money and would invest it in different companies.  I had no idea there were laws for angel investors that would require a person to become an accredited investor.  I’ve come a long way in a year and, this past August, I observed a quarterly pitch session held by the Charlotte Angel Fund.  I interviewed Greg Brown, the administrator for the fund, during ENT 640 and he invited me to the session.

I was very excited to be able to see the process up close after having read about angel investors at length for the class. My imagination led me to believe it would be in a closed conference room with lots of suits and ties.  I was wrong.  It was held in a large multi-purpose room at Packard Place, a local entrepreneurial shared working space.  Most people were dressed in business casual clothes except the presenters, who were more formally dressed.  I learned quickly the actual pitch meeting was a combination of investors of the fund, potential investors and an array of other guests.  It was a hot summer night and there was a light dinner with beverages and dessert.  I saw my first opportunity there to provide them with better cookies.  No one had even taken the plastic cover off the chocolate chip cookies by the time I arrived and an hour later it was still on.

The investors and guests were all very friendly and from a variety of industries.  After the socializing, the presenters and investors got down to business.  There was the normal review of some old business, announcements of upcoming events and a brief introduction of each company.  Then the presenters started.  One of the presenters gave an update through Skype about his company that the fund had invested in a year ago.  Then the new companies started.  What I noticed about both presenters is they were very confident about the product and service they were offering.  In both presentations, they were very clear with who their target market was and how their product would solve a problem.  As a consumer, I was intrigued by both companies.  After each presentation, they took questions from the audience. Here’s more naïveté — I thought the investors would be firing questions one after another trying to have a “gotcha” moment. None of that took place

Both presenters handled the questions with ease. Unlike me who was having some trouble keeping up with the banter about valuations.  After the presenters finished and all questions were answered all guests were asked to leave. Discussion time for only fund members.

I was permitted to stay and listen as the investors discussed all three companies.  There was thoughtful discussion given about each presenter’s idea, management team, and potential as a good investment for the fund. The conversation continued until a decision was made about how they would proceed with each company. Greg led the whole meeting and once decisions are made about the investment he follows up with them.  The meeting concluded and we were dismissed.

It was very enlightening to observe the discussion after the presentations. Everyone’s opinion, thoughts, and ideas were welcomed and appreciated.  Now I’m not sure if that happens in all angel investor meetings or it’s the southern hospitality North Carolina is known for.  As I sat and listened, I couldn’t help thinking I’m not an entrepreneur; I don’t have an idea that will change the world.  What I do have is a desire to change lives and as more lives change, the world can change. So maybe I am an entrepreneur.

Angel investing may not be the way for me to fund my business, not enough return on the investment in a timely manner.  So, I might have to go back to my original naiveté and find “a person who has extra money and would invest it in different companies.”

Resources:

http://www.cltangelfund.com/

11 thoughts on “Week 2 ENT 650: Angel Funding & the Pitch Session

  1. Thanks for a peek inside the process. That’s fascinating and really helpful. In response to “Angel investing may not be the way for me to fund my business” I would add the word “now”. Sure, now you are tiny and have limited goals and expectations. You want to establish a proof of concept and launch your dream. But let’s imagine down the road that you succeed and all is going well. Then you think, “hey, perhaps I should expand or open up a second site?” Then it’s time to get some serious capital. At that point, you have numbers to show, a track record, and a different vision of where the company can go. And you’ll have all this entrepreneurship to guide you.

  2. CeCe,
    I too was naive in my understanding of what an Angel investment was and how it operated. You and I had the exact thoughts, but I also considered them to be similar to a regular silent investor. Reading Winning Angels was enlightening and overwhelming all in one. I provided great information in layman terms but gave sound advice about the probability of return on investment (ROI). Also, thank you for sharing your experience, I was starting to think that to be apart of Angel investment, one must be apart of a secret society. Angel investing is an interesting principle, and it’s certainly not for the weak at heart. Similar to regular investment in stocks and bonds, one can either win big, lose big, or break-even. However, Angel investing requires a lot more money and a certain level of industry expertise to minimize risk.

    I also completely agree with Brad. Knowing when to use Angel investing as an option is key.

  3. Great article. Thanks for sharing your experience with us. Money, financials, investors, whew — it’s a lot to learn about and take in. So, when I first started this program, I knew very little. But, I’m glad that you shared your experience, angel investing doesn’t sound so scary as it once did. I learned along the way that there are different types of investors for every situation and entrepreneur. I think someone should do a lot of research before seeing some of these inventors. Knowing who to use and when to use these resources will be key in any business adventure.

  4. Cece,
    That sounds like an amazing experience to be a part of and see first hand how Angel investors choose who to invest in. This meeting almost sounded like a shark tank type situation where the investors would choose who to invest in after listening to the pitches. Angel investors must have a lot of extra money to be able to be a part of something like the Charlotte Angel Fund group, I wonder if they invest full-time, if they are retired and do this for a job now, or if they mostly run their own companies and want to help others to start their own companies. Thanks for the post and insight into this type of event.
    -Mackensie

  5. Cece – excellent post, yet again. As Mackensie noted, this really does seem like Shark Tank experience (but less intensive and no tv cameras :). I think your experience was a very useful one – to sort of see how the sausage is made in some ways. I also recognize where you are coming at this from as it relates to using angel investors for funding – as you and I both seem to be focused on alternative sources of funding to get our respective ideas off the ground and into the air! Thanks again for your thoughtful responses.

  6. CeCe very informative post! I don’t believe that this form of investing is for me and my business. You were very thoughtful in how you explained the process..

  7. Maybe you could start small and cater their next event? That is amazing that you got to see the whole process and how they vetted out the idea. Plus, you could pitch that your company will have an X $ amount that will be reoccurring for the next X amount of years; the investors may like the idea of having another steady streamline of cash coming in.

  8. First of all, you are definitely an entrepreneur. Stepping foot in this program to gain the necessary skills to be successful in operating your own business, I think, says so. Secondly, that was an interesting story to hear how that was set up. I’ve been listening to a podcast called “The Pitch”, you should check it out. It’s probably more in line with your original thoughts. I can’t imagine all pitches end up in a setting like that, but it’s cool that there are some that do. I think it eases the tension and allows the entrepreneurs, and investors, to feel more comfortable asking and answering questions.
    Best,
    Alex

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