The only official angel investor association in WA, Perth Angels, is holding a ‘screening session’ this Friday (11th May)… are you ready?
Why are angels called angels, by the way, do you know?
Well, apparently, they got their name from Broadway theatre in the early 20th century. Angels were wealthy individuals who pumped in their own money to get some play or musical funded. With banks, government and other financial sources deeming the investment too risky, these ‘angelic’ people (who were probably doing it more through kindness and a desire to see something get up than see a return) were the difference between a show opening or remaining dark.
These days, ‘angel’ is really another word for a private investor providing seed capital, putting his or her own money into an early stage company, in return for a (usually minority) equity stake. It’s about as risky an investment as you can make. But, for many, it’s a way of ‘giving back’ after a successful business life, and a chance to have some fun and add value too. Bless you, my angels.
It’s also a seriously important source of funds.
Without angels, there would have been no Canva, no Atlassian, no Vinomofo, no Health Engine.
As we saw in last week’s excellent funding report from our friends at Techboard, the amount of private funding in WA almost doubled in the March quarter to $15M, not an insubstantial sum of money. Just a few years ago, there was nothing like this level of funding going into early stage ventures from private individuals here.
In the same way during the golden age of Broadway theatre, banks and other financial avenues were closed to a fledgling startups, so too once the 3Fs money is gone (family, friends and fools), it’s angel funding and/or an Accelerating Commercialisation grant or perhaps nothing that is left. Unless you can fund your startup from customer income alone, which for many is the best way.
Perth Angels is comprised of a network of private investors here in WA. A not-for-profit established in 2010 by a committee of eight, Perth Angels host a number of events to network with like-minded individuals seeking to either expand their portfolios (angels) or bring their products to market (startup entrepreneurs). They hold regular pitch nights, where pre-screened investment opportunities (usually early stage startups) get to present their business and investment opportunity to a room of potential individual investors.
Some of that fresh private $15M investment money in the March quarter came from Perth Angels, following on from the pitches that happened at their December pitch night.
Deal screening sessions take place prior to every pitch night and provide innovators the forum to present their investment opportunities and receive feedback. The best ones are then taken to the pitch night itself.
One such screening session is taking place this Friday (11th May) and if you are interested, please email Danielle, Business Manager on email@example.com.
On the pitch night itself, the startups get 10 minutes to pitch their idea, with slides, to the room. Then there’s a Q&A. After each of the (usually 3) startups have pitched, there’s a networking session where angels can mingle with the startups. After that, the startups leave, and behind closed doors, the angels discuss which ones they’d like to invest in, and who might lead the investment, or not.
I have attended a few of these, and the quality of the pitches varies tremendously. All I can say is, practice, practice, practice. Please do not read out slides, don’t have too many bullet points (preferably none). Let your passion for the project come out, and give evidence, evidence, evidence. You are pitching to deeply analytical people, who will view this as an investment opportunity.
- What big hairy global problem are you solving? And why is it going to be you that solve it?
- What’s in it for them?
- What’s the exit opportunity? How can they make money from it?
- How can they add value? What doors can they open for this company?
Angels know that 90% of what they invest in will not make money, or give them a return, but they still screen their investments carefully. They may say no to 19 before they say yes to one. And even they understand that that one may not make a return. Among 10 investments they do make, perhaps one will return 10+ times, a couple may give them their money back, and for the rest they will never see a cent.
So, perception switch. Think what it’s like to be them. Why should they invest with you? Why should you be the one in 200 or so opportunities they see that will give them that 10x return?
Be so good, you almost dare them not to invest.
And if you do get an offer, remember it’s more than money. What can this angel investor bring to the party? How can they help you? Do you want to work with them? How active or passive do you want them to be?
Once you take their money, and they have a piece of your company, you have a financial relationship that can only be ended by the company either folding, or an exit opportunity. Taking angel investment money is not to be taken lightly, and is not for everyone.
For anyone looking to pitch at Perth Angels, look over their website, where they provide a heap of information on how they operate.
** FOUR OTHER PITCH EVENTS THIS MONTH!! **
- 10th May ~ Hacker Pals are running a pitch night at ECU, Joondalup campus
- 18th May ~ Bloom at St Cats are running their monthly pitch night, at Bloom
- 24th May ~ Tank Stream Labs are bringing their Seed Money Pitch Night to Perth.
- 30th May ~ Startup News will also be attending the Innovation Bay Dinner – and will report back on how that goes.