Golden Triangle Angelnet a Golden Opportunity for Local Entrepreneurs

It was bound to happen eventually. It seems I caused a little confusion with a comment I posted on Facebook the other day. I posted the following on Randall Howard’s Facebook page:

A full house is great. I think Angelnet is well positioned to succeed where others have, well, failed. Happy to help if I can.

I was referring, of course, to the recently launched Golden Triangle Angelnet, an organization that brings together active angel investors to listen to pitches by companies seeking seed capital. A friend and colleague, Rob Douglas is the driving force, along with his partner Carl Furtado (also a good friend and colleague). Randall had noted that the previous evening Angelnet had attracted a full house of angel investors, which is a wonderful thing.

So, to be clear, yes, I absolutely support and encourage the work of Angelnet, and also all similar organizations both locally and around the globe. Clearly I’m very passionate about the creation of new companies and the capital sometimes required to do so. I think angel groups, of all forms, can play a tremendous role in facilitating deal flow.

Of course, I’ve been heavily involved in raising seed capital for many different companies, including my own. I’ve also presented to other angel groups, supported other investors as they did the same, researched different angel group models around the globe, and met the principals within several other angel groups. Thus, I’ve formed some opinions.

Two of the largest, and often unspoken, challenges when raising seed capital relate to human relations. First, people invest in people. They invest in people that they know, that they respect, that they trust, and that they like. And second, groups often fall into a trap known as “group think,” whereby one or two outspoken individuals lead the opinions of all others in the group.

So yes, people invest in people. And yet, 95% of those seeking seed capital spend 95% of their time talking about the business and opportunity, and about 5% of their time talking about the people, themselves. Rarely does a potential angel investor get to know much more than surface, boiler plate information about the entrepreneur(s).

In some ways, during a presentation to angel investors, it’s like what Marshall McLuhan said, “the medium is the message.” The presenter, and how he/she conducts his/herself, is the message.

Ideas are a dime a dozen down at the local corner store. Execution is everything. We’ve all heard and understand that most investors will take a mediocre idea executed by a stellar team long before they’d consider a stellar idea executed by a mediocre team.

Several years ago, as I mentored the WLU MBA students that drafted the original business plan for the Accelerator Centre at UW, I met with a gentleman that ran an angel group somewhere in Scandinavia. Unfortunately, I’ve lost touch with him and cannot remember his name. However, what struck me about their model was that it seemed far more like a dating service than a traditional dog-and-pony show, presentation style event.

In this Scandinavian model, they truly focused on helping potential investors get to know the entrepreneurs behind the candidate companies. Social time was extensive. They all sat down over a nice meal. The focus was on human relationships, more so than simply the business idea.

The second major often unspoken challenge is group think. I witnessed this repeatedly within the now-defunct Toronto Angel Group. The company presentation had barely ended, and yet one or two highly negative individuals began dominating the discourse. Others who may have had a very positive opinion on the investment opportunity felt pressured and bullied, and thus kept quiet.

I’ve also witnessed this group think phenomena in other asynchronous presentation settings, such as when a company presents to one particular investor candidate, and then he/she ventures off to discuss they idea with his/her advisors. The advisor meetings are generally one-on-one, with the angel, rather than in a group setting. Nevertheless, group think prevails.

The angel will contact the first advisor and discuss the concept. Invariably, he/she will then mention the opinion of the first advisor to the second advisor, often swaying him/her. The third advisor is further swayed by the opinions of the first two, and so on, and so forth.

Yesterday I met with Rob Douglas and of course Angelnet came up in our conversation. I was VERY encouraged and happy to learn that Rob and his team are well aware of these two angel group challenges and have plans in place to mitigate the effects.

So once again, to clarify, I am delighted that the Golden Triangle Angelnet now exists, and I hope and expect that it will help with seed capital deal flow. I’m very passionate about this topic, and remain committed to helping in any way possible.