How angel ecosystem and angel investors impact internet startups

2016/10/10 John Sechrest

Seattle Angel Conference@sechrest

How Angel Ecosystem and Angel Investors impact Internet Startups

John SechrestFounder of Seattle Angel Conference

Facilitator of Startup Weekends

Lean Startup Seattle

Seattle Startups Open Coffee

Founded an Internet Service Provider

Previously Economic Development Director

Economic Development Pathways

Recruitment ( Bring from outside)

Retention and Expansion (Grow what we have)

Tourism (Show what we have)

Startups ( Make new innovation )

Startup EcosystemEntrepreneur Centric

Coworking spaces

Accelerators

Educational programs

Networking programs

Startup Weekend

From idea to growth company

Focused on creating Growth companies

7+ Billion people who have problems to be solved

What makes a good Ecosystem

(ala Dave McClure)

Attitude - Optimism

Mentorship and Education - Knowledge

Universities and Companies - People

Capital, Legal, Finance - Infrastructure

Engineering and Design - Product

Platform and Distribution - Customers

Online Payments - Monetization

IPO / M&A Market - Exits

Building a startup ecosystem funnel

1000 entrepreneur garages ( $10K)

300 Accelerator Startups ( $50K )

100 Seed Stage startups ( $200K )

30 Series A startups ( $1M )

10 Later Stage companies ( $10M )

2 IPOs ( $100M )

If Entrepreneurs are everywhere, then

Angel Investors can be everywhere

From Dave McClure: Solutions for Investors

in new Tech Markets

Increase Number of Investors Increase Frequency of early-stage

investorsIncrease portfolio size/ Decrease check

sizeIncrease frequency of acquirers

Increase the number of Investors Add more new investors Increase the number of deals Build cohorts of investorsIncrease deal flowIncrease the quality of companiesLean StartupStartup WeekendFounder / Team formationIncrease the quality of deals Train investors Create investor perspectiveIncrease the investor portfolios Invest in cohorts

How can we improve investments?

What makes an Angel Investor Different than A Venture Capitalist

Venture Capitalists invest other people’s money

Venture Capitalists take a fee for investing other people’s money

Angel Investors investor their own money

Angel Investors work to minimize overhead on investments

What do Angel Investors bring to the process?

Due Diligence

Feedback to the Entrepreneurs

Perspectives on the Market

Connections to others

Social Validation for other investors

5 types of Group Angel Investing

Angel Networks - 8 networks in Seattle

Managed Angel Funds - Founders Coop

Passive Angel Funds - AoA fund

Active Angel Funds - Seattle Angel Fund

Event Funds - Seattle Angel Conference

What makes for good Angel Investing:

Recognize that investing involves significant uncertainty.

Invest in things you know.

Build a diversified portfolio

Do meaningful due diligence

Support your startups

Make introductions

Seattle Angel Conference Progress

In the 10th Cycle

Invested in 21 companies

Near $2M invested

Over 200 new Angel Investors

Created foundation for the Seattle Angel Fund

What are the ecosystem roles of Angel Investors

Increase the success rate of growth companies

Increase the quality of startup founders

Decrease risk for startups

Connect startups to resources

Provide perspective

How does the Angel Conference Work?

40 Investors 50% New

50% Previous Investors50 Companies12 week review24 Quarter Finalists

12 Semi Finalists6 Finalists1 Investment2-3 Side dealsPublic final Event

Benefits of the Conference

Give Investors perspective

Small risk to learn about Angel Investing

Connects new Startups with new Angels

Helps Startups get stronger

Creates better deal flow for other Angel Groups

Creates more Angel Investors for other Angel Groups

Creates stronger leadership for startups

Evolution of a Startup

1st - Seattle Angel Conference

2nd - Seattle Angel Fund

3rd - Specialized Angel Network

4th - Passive matching Fund

5th - Venture Series A

Seattle Angel Conference Progress

In the 10th Cycle

Invested in 21 companies

Near $2M invested

Over 200 new Angel Investors

Created foundation for the Seattle Angel Fund

Seattle Startup Scene

11 angel groups

45+ Coworking facilities

5 Active VC’s

Hundreds of events each month

Questions?

Res

ourc

es

Rob Wiltbank Data http://www.willamette.edu/~wiltbank/

Wade Brooks http://willamette.edu/mba/faculty-research/faculty/brooks_w

ACA https://www.angelcapitalassociation.org/

ARI http://www.angelresourceinstitute.org/

Halo Report http://www.angelresourceinstitute.org/research/halo-report/halo-report.aspx

Gust.com

Angel.co

Seat

tle

Res

ourc

es

http://www.funding-quest.com/wp-content/uploads/2016/04/PNW-angel-groups-2015-investments.pdf

http://startupseattle.com

http://startupseattle.com/resources/map-seattle-startup-ecosystem/

http://geekwire.com

Geekwire “200” - http://www.geekwire.com/geekwire-200/

http://www.geekwire.com/startup-list/

Ecos

yste

m

Res

ourc

es http://www.angelblog.net/Startup_Funding_Sources_of_Financing.htmlhttp://www.slideshare.net/dmc500hats/lean-little-cockroach-startuphttp://www.slideshare.net/simeons/patterns-of-successful-angel-investing-8306787/39http://www.slideshare.net/dmc500hats/hack-osaka-innovation-strategies-for-regional-startup-ecosystems/2-BE_THE_NAIL1_BE_THEhttp://www.slideshare.net/dmc500hats/farming-unicorns-building-startup-investor-ecosystems-dublin-june-2016/45-Questions_Comments_More_Info_http500cohttp://www.slideshare.net/TimDick/state-of-venture-capital-and-angel-markets-2016https://www.pm360online.com/wp-content/uploads/2016/04/f1_chart.jpg

Sta

rtup

Pat

hway

s Companies attract talent to Seattle.People at companies get idea to start a companyCome to Open Coffee or to other networking eventsPerhaps come to a Startup Weekend to explore ideaLeave JobFind TeammatesJoin Coworking spaceApply to acceleratorsApply to Angel GroupsGrow companyDo Merger